As a technical trader, I spend a good amount of time looking for repetitive patterns that re-occur over and over and over again. With the help of data-crunching software, anyone can easily write a few scripts and perform their own analysis to find highly repetitive setups.
When it comes to repetitive patterns, we often talk about chart patterns such as breakout confirmation, bullish and bearish reversal pivots, and continuation patterns that occur frequently with a high degree of accuracy. However, we often overlook ONE type of highly repetitive pattern that occurs every year.
This pattern is very easy to trade.
It is not s-e-x-y, which is why I consider it “The Forgotten Pattern”, but it works!
Seasonality is simply a period of time when an asset (i.e., stock) tends to move in the same direction every year. That’s it! So, if XYZ stock moved up from November 2 to November 22 over 17 of the past 20 years, the assumption is that it is also likely to move up this year as well.
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