EURUSD and the January Effect – An update
- Posted by PeterLBrandt
- on January 26th, 2012
Will the January Effect work in EURUSD in 2012? If so, what’s next?
I have written about the January Effect in the forex markets (see here) — the strong tendency for a season low or high to be made during January from which at least a six month advance or decline will occur.
Initially it looked like the Jan 3 might have been the January high. But that high was exceed yesterday and today. We now have a new January high (so far). The questions are:
- Will the high today (or by next Tuesday) become the new January, marking the risk point for shorts?
- Is the Jan 13 low the January low — and we go up from here?
- Will the January Effect not work in 2012?
I do not have the answers to the questions above. But, the market today looked like an exhaustion day — trading higher and closing back at its opening price. I asked my Tweet community what this pattern is called — and I got back about 6 or so different names.
I normally trade patterns — big patterns (12 weeks or longer) but I also have a few specialty set ups I trade. The January Effect is one. If the cross closes today in the area of the open price I will bet 50 basis points (1/2 of 1% of capital, or $5,000 per $1 million) that the mid Dec high will hold. The worst thing that can happen is that I will be wrong.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Peter Brandt entered the commodity trading business in 1976 with ContiCommodity Services, a division of Continental Grain Company. From his start in the commodity industry, Peter's goal was to trade proprietary funds. But, he first needed to learn the business. More »