EUR/USD and the January Prediction
John McGinley of McGinley Dynamic fame, and former 25 year editor of the Journal of Technical Analysis is also credited in the 1980’s with the January Stock market indicator. An up January Dow predicts a higher stock market in a long tested period. How is the January effect for EUR/USD.
Since EUR/USD’s 1999 introduction and 18 years later, EUR/USD was down for January 12 years and up 6 years. Down months total averaged 591 pips while up months averaged 558. Since 2008, EUR/USD was up in January 5 times and down 5 times. Since 2008, Down months averages to 697 pips while up averages to 573 pips.
From 1999 to 2008, EUR/USD was down in January 7 times and up 3. Down months averages to 516 pips while up months averages to 518. January 2016 was the worst movement year of the 18 as EUR/USD moved down 253 pips while January 2014 follows with 290 down pips. EUR/USD best movement year was January 2009 with 1191 down pips followed by January 2016 at 1042 down pips. EUR/USD best January up month was January 2011 at 876 pips. Currently, EUR/USD is up for January 2017 at 324 pips and beats January 2016 and 2014.
A down month in January predicts EUR/USD ends in December of the same year lower 7 times since 1999. Since 2008, a down January month predicts EUR/USD lower 3 times. From 1999 to 2008, a down January predicts a lower EUR/USD in December 4 times.
From 1999 to 2008, up January months predicts EUR/USD up 2 times in December. Down January resulted in higher EUR/USD 3 times from 1999 to 2008. Down January resulted in higher EUR/USD for the year 5 times since 1999 and 2 times since 2008. Up January resulted in higher EUR/USD for the year 4 times since 1999 and 1 time since 2008. An up January resulted in a lower EUR/USD 6 times since 1999 and 3 times since 2008.
Since 1999, Down January to down December and lower EUR/USD averages 1401 pips. Up January to higher December EUR/USD averages to 1552 pips. The worst EUR/USD movement year was 2012 at 79 total pips alongside an up January candle. January down and year down best movements were 1999 at 2059 pips, 2005 at 1894, 2014 at 1681, 2015 at 1578 and 2010 at 1586 pips.
The best movement years overall were 2009 at 2337 pips, 2008 at 2343 pips, 2002 at 2106 pips and 1999 at 2059 pips. The worst movement years were 2012 at 79 pips, 2016 at 607 pips, 2011 at 876 and 2013 at 853. Worst year movements were all post 2008. Since 1999, yearly movements decreased significantly.
Overall, down January is a good barometer to a lower EUR/USD for the year with a 7 year track record while up January predicts EUR/USD higher 6 times and 3 times since 2008. Only 5 of the total 18 years saw either a January up candle with a lower EUR for the years or down candle V a higher EUR/USD. Down year see an average of 1400 pip moves. Up January to higher EUR/USD sees an average at 1552 pips.
Brian Twomey, Inside the Currency Market, btwomey.com