June Forex trading patterns

The month of June in the forex market starts a four month progression, featuring some of the strongest and most interesting calendar ("seasonal") price movement patterns of the year.  In each month at least one of the major pairs - and generally some of the primary crosses as well - has demonstrated a strong directional tendency.

For the month of June, the pair to watch is USD/CAD.  Every year since 1999 the Canadian Dollar has appreciated against the US Dollar.  That's seven years in a row since the inception of the Euro.  These have been no incidental moves either.  On average, one selling USD/CAD at the start of the month, and buying back at the end over that span would have made about 220 pips.  Actually, the bias has been strongest in recent years, with 2004 and 2005 posting declines of nearly 300 pips.

Given the trends in the USD right now, it certainly would not be hard at all to see USD/CAD post an eighth straight down year for the month of June in 2006.

Most of the USD/CAD declines seem to take place in the latter part of the week.  On average, Wednesday, Thursday, and Friday during the month of June have accounted for 50 pips in downward action each week, with Wednesday and Friday in particular being to the downside about 65% of the time.

There are also some other intriguing weekday patterns for the month of June which could interest short-term traders:

• EUR/USD has risen 67% of the time on Friday, averaging 20 pips.
• GBP/USD has risen 70% of the time on Thursday, averaging 34 pips.
• USD/CHF has risen 65% of the time on Wednesday, averaging 31 pips, but fallen 63% of the time on Friday, averaging 26 pips.

Of course the figures presented herein are simple observations based on the last seven years worth of data.  Just because a pair has demonstrated a tendency to act on this way or that does not guarantee that it will do so again this time around.  This information is probably best used to help one bias her/his trading, not necessarily as an outright trade decision tool.  As always, sound risk management is strongly recommended.

Note: The statistical information provided in this article is presented in Opportunities in Forex Calendar Trading Patterns, a 175+ page research report.  A sampling of that report covering June data can be requested here.

John Forman is the author of The Essentials of Trading (Wiley) and a near 20-year veteran of trading and investing across a wide array of markets and instruments.  He is also Managing Director & Chief Trader for Anduril Analytics. His daily market commentary and analysis can be found in the Anduril Trading Report.