MMXM 2.0: Macro Market Analysis - Seasonal Tendencies Introduction

Introduction to Seasonal Tendencies

In this episode, Oliver introduces the concept of seasonal tendencies and explains how they can be used for high probability trading. He also discusses how seasonal tendencies are a form of time analysis for the macro perspective.

What are Seasonal Tendencies?

• Seasonal tendencies repeat yearly and show the best routes and times to reach your destination.

• They use 30 years of data to study where highs and lows tend to form over the 12-month cycle.

• Smart money controls commodity prices using seasonal tendencies as treasure maps.

Understanding Seasonal Tendencies

• A full trading year has a Jan open and Dec close with a 12-month cycle.

• Different futures contracts deliver the 12-month cycles, such as March, June, September, December.

• Seasonal tendencies compile x amount of 12-month cycles to form a tendency for each contract delivery month.

Conclusion

• Understanding seasonal tendencies is important for timing trades in explosive environments rather than choppy conditions.

Understanding Seasonal Tendencies in Trading

In this section, the speaker explains how seasonal tendencies can be utilized in trading by understanding the time of year when certain assets tend to form a high or low.

Utilizing Seasonal Tendencies

• One trading year consists of 12 months delivered by four months: March, June, September, December.

• Over the past 15 and 30 years, the June contract tends to form bullish prices earlier in the contract and then later in the contract tends to form bearish prices.

• A season is just like 12 months worth of data where a big majority of this entire 12 months is either bullish or bearish.

Studying T-Bond Futures Seasonal Chart

• Let's study the 30-year t-bond Futures seasonal chart.

• The black line represents 15 years while the pink line represents 30 years.

• We have a bearish macro Kill Zone for the ZB contract here over the past 30 years (pink) and over the past 15 years (black), we have seen a sell-off in the late portion of June delivery month.

Matching Swing Points

• Match both 15-year and 30-year swing points to identify high probability seasonal swing points.

• May and June have a high tendency for bearish prices based on swing points created during these months over the past 15 and 30 years.

Incorporating Price and Intermarket Analysis

• Timing bearish prices requires incorporating price action and intermarket analysis.

Price Analysis and Seasonal Tendencies

In this section, the speaker discusses how they do their price analysis and how seasonal tendencies can affect price action.

Models for Price Analysis

• The speaker starts with models for price analysis, focusing on building a premium smart money reversal by breaking certain points in the balance price range.

• They also discuss distribution and liquidity, as well as swing lows and reclaimed fair value gaps.

Bearish Institutional Order Flow

• The speaker emphasizes that if bearish institutional order flow is present in the market, traders should not counter it.

• They suggest matching old areas of institutional order flow with new institutional order flow to identify key support/resistance levels.

Classical Swing Points

• The speaker advises looking for classical swing points when at a key high time frame PD Ray. These are important to watch for because offset distribution can disturb sentiment and trap traders.

• They provide an example of this happening at a support level where offset distribution occurs after utilizing the original consolidation. This is a key signature to watch for from a long-term perspective depending on your trading style.

Seasonal Tendencies

• The speaker discusses seasonal tendencies and how they can affect price action, specifically mentioning May and June tending to form bearish prices based on historical data. This leads to explosive moves when combined with bearish price action.

• They note that we are currently in the June contract and that there is building premium followed by neutralizing within the bearish macro Killzone (bearish institutional order flow).

One Directional Trading

• The speaker emphasizes that when price action is one-sided, traders should stick to one side of the market and expect the other side to break. This can lead to swinging the markets or one-shot-one-kill trades.

• They note that in this example, there are only two bullish candles compared to the rest being bearish, making it easy for traders to short at the daily open and be profitable.

Trading Strategies Based on Seasonal Tendencies

In this section, the speaker discusses how to use seasonal tendencies in trading strategies.

Using Seasonal Tendencies for Trading

• Sell above the open when the market opens and look for opportunities to continue shorting to the downside.

• Blend daily and four-hour charts to navigate lower time frames with more framework.

• Stick to one side of the market and focus on selling entries on lower time frames.

• Enter each trading session with one side of the market in mind and hold for longer profit objectives due to seasonality.

Limitations of Seasonal Tendencies

• Seasonal tendencies are only a tendency based on 12-month cycles, so they should be used as confluence with price analysis or interbank/market analysis.

• Use seasonal tendencies as a macro time indicator for macro confluence, but match them with price action and intermarket analysis.

Choosing Your Trading Niche

• Choose your own treasure maps by selecting your trading niche and paying attention to seasonal tendencies that support that niche.

• Stick to one trading niche because trying to balance multiple niches can be counterproductive.

Milking the Market

In this section, the speaker talks about how to focus on milking the market during a specific season and then taking a break to refresh before approaching another season.

Focusing on Specific Seasons

• The speaker suggests focusing on milking the market during a specific season.

• This allows for maximum profit during that time period.

Taking Breaks

• After the season is over, it's important to take a break and refresh.

• This allows for relaxation and enjoyment of other activities.

• It also helps to relieve stress and prepare for the next season.

Conclusion

• The speaker concludes by mentioning that all downloads are available below the video.