With USD/CHF on the cusp of a bearish engulfing month, we take a look at the pattern’s forward returns alongside the Swiss franc’s seasonality.
Unless USD/CHF can close above 0.9864 by the end of the year, its on track to close December with a bearish engulfing candle. It’s by no means a not a common event, having only occurred 19 times since 1982 and its last instance was in January 2017. But it does appear to be a bearish one overall looking at the forward returns.
Monthly Reuters data since 1982
Seasonality points towards a rainy April:
Has luck would have it, April tends to be a bearish month according to seasonality. Moreover, April has provided negative average returns for USD/CHF over 50% over the past 5, 10, 15 and 30 years of data.
We can also see that December has followed its seasonal tendency for negative returns this month (albeit a miraculous turnaround before the end of the year).
Takeaways:
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Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions."