ETHUSD Seasonality Forecast, 1st WOTY 2022Seasonality helps us identify how price over a set period of time in the year typically performs. Not every year should seasonal behavior be expected, and some periods have strong or weak seasonal effects.
In these three charts I have Wayne's Pivots Pro and Pivot Probabilities applied, and combining the two we can get a trading strategy for seasonal effects.
While these percentage odds may sound good, in reality because the sample count is so low on INDEX:ETHUSD , only 7 years so only 7 samples; it's difficult to say until there's more data with certainty if there is a true seasonal pattern to be analyzed. That being said, understanding the current limitations of the data, readers should take these historical probabilities and this analysis with a grain of salt.
Notes:
All pivot points in these charts are on a weekly resolution.
The orange dotted line is a weighted mean, taking pivot point levels and weighting historical probabilities against them to create a single probability weighted pivot point level. It acts like a mean of our visual histogram.
Chart 1
Over the last 7 years, 71.42% or 5/7 closes on INDEX:ETHUSD in the first week of the year were above the central pivot, CP ( $3,848.04 ).
Only 2 times before have we close below CP.
Closing above R1 ( $4,111.28 ) has occurred only once before.
For these three reasons we will use a Bullish Range trade setup as it best fits the historical distribution of closes between any two pivot points.
Chart 2
In the last 7 years, 57.17% ( 4 occurrences ), of tops occurred between CP and R1.
Three highs have occurred above R1 historically, 42.86% of the time.
Because of the low sample count, it is safer to assume the odds are in reality closer to 50/50 whether or not we get a high above or below R1.
The total, historical probability of a high above the Bullish Range target of H1 ( $3979.66 ) is 71.43%, or 5/7.
Chart 3
In the last 7 years, 57.17% ( 4 occurrences ), of bottoms occurred between CP and S1 ( $3567.65 ).
Again, because of the low sample count, it is safer to assume the odds are in reality closer to 50/50 whether or not we get a low below or above S1.
The total, historical probability of a low below the Bullish Range stop loss of L2 ( $3436.03 ) is 28.58%, or 2/7.
