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    The Hidden Patterns behind 15 Forex Pairs
    The Hidden Patterns behind 15 Forex Pairs
    The Hidden Patterns behind 15 Forex Pairs
    Ebook195 pages52 minutes

    The Hidden Patterns behind 15 Forex Pairs

    By George Protonotarios

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    About this ebook

    Fundamental analysis and statistics create a unified area of researching and analyzing the behavior of global financial markets. Fundamental analysis investigates the ‘Cause’ of macroeconomic events, while statistics and technical analysis examine their ‘Effect’ on the global financial markets.

    Trading statistics is the business of analyzing past price data and identifying recognizable price patterns which may lead to high-probability trends. The book aims to reveal major seasonal and momentum patterns in the Foreign Exchange market, behind 18.5 years of daily data. Due to the nature of the global monetary system, currencies tend to follow seasonal patterns. The dynamics of demand/supply change in accordance with time. There are certain months of the calendar year when specific trends tend to emerge. This happens as large institutional investors do the same thing every single year.

    The book reveals patterns for 15 Forex pairs: EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD, AUDUSD, NZDUSD, EURGBP, EURCHF, EURJPY, EURCAD, EURAUD, EURNZD, GBPJPY, and GBPCHF. Through extensive data analysis, a new indicator is introduced (ΔMP). This indicator is formed by summarizing the historical divergence between closing rates and intraday ranges. The mission of ΔMP is to measure and illustrate the historical momentum of each Forex pair. ΔMP charts are drawn, including Linear and Polynomial trendlines, plus R-Squared (R2). Overall, there are more than 100 charts presenting seasonal and momentum trends. The book also contains other useful trading resources such as best times to trade and historical correlations between Forex pairs. Correlation analysis measures the relationship between two numerical variables. In our analysis, these variables are the daily closing rates of 15 Foreign Exchange pairs for two periods: 18.5 years and 5 years.

    Information is power when trading Forex, and seasonal and momentum analysis creates an important piece of information, offering extra probability points. Adding seasonality to the trading process can provide trading ideas, confirm trades, and assist in better timing trades.

    LanguageEnglish
    PublisherGeorge Protonotarios
    Release dateNov 22, 2018
    ISBN9780463321638
    The Hidden Patterns behind 15 Forex Pairs
    Author

    George Protonotarios

    George Protonotarios is a Professional Financial Analyst and a Financial Content Writer.

    Read more from George Protonotarios

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      Book preview

      The Hidden Patterns behind 15 Forex Pairs - George Protonotarios

      THE HIDDEN PATTERNS BEHIND 15 FOREX PAIRS

      REVEALING MOMENTUM AND SEASONAL PATTERNS BASED ON 18 YEARS OF DAILY EXCHANGE RATES

      GEORGE M. PROTONOTARIOS

      COPYRIGHT INFORMATION

      ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means without the prior permission in writing of the publisher, nor be circulated in writing of any publisher, nor be otherwise circulated in any form of binding or cover other than that in which it is published without a similar condition including this condition, being imposed on the subsequent purchaser.

      DISCLAIMER AND LEGAL NOTICE

      This Book is sold with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services or advice by publishing this Book. Each individual situation is unique. Thus, if legal or financial advice or other expert assistance is required in a specific situation, the services of a competent professional should be sought to ensure that the situation has been evaluated carefully and appropriately. The author and the publisher disclaim any liability, loss or risk resulting, directly or indirectly, from the use or application of any of the contents of this Book.

      The information presented in this Book represents the view of the author. Every attempt has been made by the author to verify all information included in this Book, but there is no guarantee about the accuracy and the reliability of any information presented in this Book. This Book is not intended for use as a source of financial or investment advice.

      RISK WARNING

      There is considerable exposure to risk when trading Forex, Futures and Options. Trading Forex and other leveraged products involves a significant level of risk and is not suitable for all investors. Before undertaking any such transactions you should ensure that you fully understand the risks involved and seek independent advice if necessary. The possibility always exists that you could sustain a substantial loss. Never trade with funds that you may need in the future. Past performance is not necessarily indicative of future results. Any opinions, suggestions, brokers, systems, services, software, reviews, promotions, bonus, rebates, links and web-sites mentioned on this Book are provided as general market commentary, and do not constitute investment advice in any way.

      © George M. Protonotarios 2018

      The Hidden Patterns Behind 15 Forex Pairs– Copyright November 2018

      INTRODUCTION

      Global currency rates fluctuate in accordance with new macroeconomic data and other emerging fundamental conditions (strategic, sociopolitical, and technological). The core of any investment decision should rely on the general macroeconomic cycle. This macroeconomic cycle is based on a row of news releases and events following a logical pattern. Pivotal events, such as interest rates hikes, create a logical and predictable pattern. Trading statistics is the business of analyzing past price data and identifying recognizable price patterns which may lead to high-probability trends. However, these price patterns were originally formed according to a particular row of news releases and events in the macroeconomic cycle. Consequently, fundamental analysis and statistics create a unified area of researching and analyzing the behavior of global financial markets. Fundamental analysis investigates the ‘Cause’ of macroeconomic events, while statistics and technical analysis examine their ‘Effect’ on the global financial markets.

      This book aims to reveal major seasonal and momentum patterns in the Foreign Exchange market, behind 18.5 years of daily data. Seasonality refers to a time series in which market data tends to experience regular and predictable changes. Any price pattern correlated with a particular month, quarter or another period can be seen as a ‘seasonal’ pattern. Seasonality plays an important role when trading the financial markets, and especially the Foreign Exchange market. Due to the nature of the global monetary system, currencies tend to follow seasonal patterns. The dynamics of demand/supply change in accordance with time. There are certain months of the calendar year when specific trends tend to emerge. This happens as large institutional investors do the same thing every single year.

      However, seasonality is an average reliance on past market data. That means a trading strategy based solely on seasonality will not be able to forecast a significant number of profitable trades. Seasonal statistics provide a window of opportunity but cannot create an independent forecasting framework. Sophisticated traders will combine seasonal statistics with emerging fundamental data and/or with a price pattern analysis tool to confirm trades and to ensure reliable entry/exit points.

      Through extensive data analysis, a new indicator is introduced (ΔMP). This indicator is formed by summarizing the historical divergence between closing rates and intraday ranges. The mission of ΔMP is to measure and illustrate the historical momentum of each Forex pair. ΔMP charts are drawn, including Linear and Polynomial trendlines. Overall, there are more than 100 charts presenting seasonal and momentum trends. This book

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