May winds down with another win for the seasonals
Some months are better than others for trading seasonal patterns. This year, following the trends in May was a great idea.
I wrote about three seasonal patterns in the forex market at the start of the month and all three were winners.
1) EUR/USD shorts
May has been easily the worst month for the euro over the past 10 years and shorts paid off once again this time. The average decline in May in the past decade was a whopping 1.76%; this time it fell only 0.69%, baring whatever happens in the day ahead.
2) AUD/USD shorts
May is the worst month for the Australian dollar over the past 5, 10 and 30 year periods. It wasn't the time to fight that trend as AUD/USD sank 1.87% in May. The decline came even with the RBA holding interest rates. In New Zealand, which I also highlighted, the RBNZ pulled the trigger and NZD/USD fell 2.44%.
3) Cable shorts
I noted that the pound had fallen in May for nine straight years. Well make it ten. The pound rallied 1.2% on May 2 then sank pretty much every day of the month afterwards and is now trading at the lowest since the first trading day of the year. It's down 3.19% on the month.
I'll have the June seasonals up tomorrow.
