How our seasonals did in August

Seasonals are part of the technical analysis toolbox. At the start of August I brought you a handful of trade ideas based on seasonals. Here is how they did:

1) What the forex seasonals have to say about the cable breakout

What we wrote: I noted that cable had a strong July and had appeared to have risen above significant resistance to an 11-month high. I warned that it wasn't a trend to chance because the pair had fallen "in 8 of the past 10 Augusts with an average decline of 1.13% in the past decade."

How it did: Cable fell 2% in August and the pound was the second-worst performer, trailing only NZD.

2) August seasonals set the table for an interesting RBA decision

What we wrote: The RBA decision was due early in the month and it set the tone for Australian dollar trading in the month. I highlighted that the seasonals were ugly, with AUD/USD declining in 10 of the past 12 Augusts, with an average slide of 1.05% in the past decade.

How it did: The RBA was a help as AUD/USD fell as much as 2.3% mid-month before a bounced led it to finish down 0.7%.

3) Gold and oil on opposite sides of the seasonal pattern

What we wrote: In a prescient note, I highlighted that hurricanes were no longer a major reason to buy oil because so much production was onshore. I underscored that Aug-Dec was a dismal period for oil. On gold, I noted that since 2000, August is the second-best month after January.

What happened: While I certainly couldn't have predicted Harvey, oil cooperated with the trade in a 5.9% fall (despite a 3% bounce on Aug 31) that was never out of the money. On gold, it was a shining month with prices up 4.1%.

4) Volatility rises in August

What we said: I wrote at ForexLive and said in an appearance on F.A.C.E that August was a month of high volatility. It's not intuitive to expect more volatility in a month of vacations but historically it is a month of volatility spikes.

What happened: The VIX jumped as much as 68% mid-month before fading to just a 3.3% gain at the end of the month.

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