2017 is coming to a close and it’s time to review the accomplishments. In the currency and stock markets, this leads to the profit-taking pattern as traders go on vacation and close most of their positions, shaping trading results. As a result, volatility, trading volume decrease and this, in turn, also serves as a signal for a temporary relief on the market. For example, here is the Dollar chart at the end of 2016 and beginning of 2017:

The onset of last three years was marked by attempts to sell the dollar, while the rest of the year it struggled to trim declines, staging pullbacks. And the change in trend, roughly speaking, was at the beginning of the new year. Making new trading decisions by large investors at the beginning of the new year is a valuable signal for the rest of traders and investors as it allows us to feel the trend which probably will last for several more months.

Another example is the bullish reversal of Oil prices after the New Year holidays of 2015:

As can be seen from the graphs, the longer was drawdown the heavier traders jumped in U-turn move with rising chances to expect the movement “from a scratch” in the new year.

Taking profit before the New Year holidays is especially important for high-risk or “wild” markets, where expectations are unstable and do not look long, the market is supported by a buzz among traders and any lull means an alarm. A classic example of profit-taking movement is the strongest correction of bitcoin and other cryptocurrencies over the year and it happened on the eve of the new year:

Even in spite of the huge popularity of the cryptocurrency, such roller coasters badly damage its reputation, repelling long-term investors. Almost 50% percentage correction Bitcoin in a few days struck a blow to the appeal of the crypto asset as an investment tool. However, a quick return to the mark of $ 15,000 transparently hints that a queue of investors was building in the market, patiently awaiting correction to take long positions on BTC.

The decline in trading activity can also provide valuable information for those who hunt for easy market signals. Some traders who are not in a hurry for the New Year’s table can try to get ahead of the crowd and open positions ahead of time for the new year, then to steadily keep on the crest of the profitable wave, which will only begin in the new year with the return of large traders to the trading desks. To take advantage of this, you need to monitor outliers in the price of particular instruments (preferably less liquid than in the foreign exchange market). Against the background of a decrease in liquidity, they can become particularly noticeable. A careful study of the schedule in the New Year’s Eve on such patterns can indicate the efforts of traders to get ahead of the crowd, whose working year was shorter.

Share this post: