Since the new year is upon us, I thought I'd take a look at what has happened in the past during the first full trading week contained in January.
So, what this means is, the date at which a new weekly candle first starts in January, thus you see the dates marked are NOT 1st January of each year. I measure from the prior day's close, which is the same as the open price of the new week. There is an edge case where a week starts in Jan 1, but since the prior close is on Dec 31, I decided to use the week starting Jan 7. The result doesn't differ much and remains consistent with the rest of the data points.
In any case, history suggests:
So, based on the past decade of price action, as long as profits are secured at +1% from the closing price of the prior day, losses can be sidestepped and further potential gains acquired.
The sample size is quite small (10), and I haven't looked into other aspects. (i.e., this behaviour could just be the result of an asset that has been trending up exponentially for the past 10 years).
The first full trading week of 2021 starts on January 4th.
So, what this means is, the date at which a new weekly candle first starts in January, thus you see the dates marked are NOT 1st January of each year. I measure from the prior day's close, which is the same as the open price of the new week. There is an edge case where a week starts in Jan 1, but since the prior close is on Dec 31, I decided to use the week starting Jan 7. The result doesn't differ much and remains consistent with the rest of the data points.
In any case, history suggests:
- The first few days of this trading week seems to always give a chance to take at least 1% profit from the open on a long position.
- Rarely does the any short term downside take out the prior day's low, so it could be sensible to put a stop loss just below the wick.
- Failure to secure profits may lead to losses of 13% to 18% by the close of the week in question.
So, based on the past decade of price action, as long as profits are secured at +1% from the closing price of the prior day, losses can be sidestepped and further potential gains acquired.
The sample size is quite small (10), and I haven't looked into other aspects. (i.e., this behaviour could just be the result of an asset that has been trending up exponentially for the past 10 years).
The first full trading week of 2021 starts on January 4th.
Comment:
I guess it would be more accurate to say this is an analysis of the days following the first weekly close in January.