Seasonal Tendencies - SMC Indicators

2024年2月20日

A Seasonal Tendency refers to a historical price action behaviour that tends to repeat during specific times of the year, month over month.

It's a roadmap to navigate price action on the daily chart to help determine the medium to long-term bias.

Seasonal Tendencies are NOT an exact prediction of future price action but rather serve as a guideline for spotting high-probability opportunities when combined with other elements of SMC Price Action analysis, such as Order Blocks, Fair Value Gaps, etc...

The Seasonal Tendencies Indicator has been tested to match what ICT has taught in his lectures. It can be applied to any Market or Asset. However, it's limited by the maximum number of years available on tradingview.

Traders can use this Seasonal Tendencies indicator to support their already existing analysis as an added confirmation tool. This indicator should not be used as a main reason to enter a trade idea.

The Seasonal Tendencies Indicator can be used in 2 ways:

1) To look for potential points of long-term reversals during specific times of the year.
2) To look for confirmation and align with an existing long-term trend.


So how does it work?

The Seasonal Tendencies Indicator takes the averages of the last 30, 10, and 5 years' prices by default and compares them to the current year's price action (Green Line).

However, the number of years chosen for the averages can be modified in the indicator's setting.

https://www.tradingview.com/x/BrqwRSGz/

When looking at the historical price action lines, generally, the price tends to make the lows and highs during specific times of the year.

Note that we should not look at the exact dates these lows and highs form, but we take time periods conceptually instead.

In the example below, the SP500 5-year average made the low on 14 March, and the SP500 10-year average made the low on 23 March.

This gives us the idea that "generally" SP500 makes the low of the year around the 2nd to 3rd week of March every year.

https://www.tradingview.com/x/JJ3VWTc3/

So, IF the trader's analysis was pointing out that SP500 is Bullish, then we use the information that we derived from the Seasonal Tendencies Indicator to look for long setups around the 2nd to 3rd week of March for medium to long-term swing trades.

The Seasonal Tendencies Indicator can also be useful for day traders as it helps support their daily bias to look for trades within the direction of the higher timeframe trend.


How do we measure the strength of the Seasonal Tendencies?

When using the Seasonal Tendencies Indicator, it's important to look for periods where the averages converge and get closer to each other. This usually indicates that during those specific periods, there is a high probability for the price to behave in a certain way.

So the closer the averages are to each other, the more likely the price would respect the Seasonal Tendencies.


Bonus Feature

Premium Discount Range

As a bonus feature, split the Seasonal Tendencies Indicator's Range into 4 quarters to indicate when the price is at a Premium (above the 50% level in Red) and when the price is at a Discount (below the 50% level in blue).

Each Premium and Discount range is also split into 2 halves.

Those levels can also be used to identify potential turning points when comparing the Current Year's price positioning in the Yearly Range to historical price action.

As you can see from the example below, most major turning points happen at around key price levels.

https://www.tradingview.com/x/2mt5Bwmo/

2024年2月22日

發行說明

Bug Fix
- Line Thickness Fixed for all years.