TimeICT Trading EducationArticle 4 of 8
ICT Seasonal Tendencies: How Quarterly Shifts Frame the Annual Bias
Markets do not move randomly through the year. The IPDA framework identifies four quarterly delivery cycles — Q1 through Q4 — each with a characteristic bias and a specific liquidity target. Understanding seasonal tendencies allows you to frame your daily and weekly analysis within the macro institutional delivery plan.
The Inner Circle Traders
9 min read
Time — Article 4 of 8
Key Takeaways
- ICT seasonal tendencies describe the macro quarterly delivery cycles (Q1–Q4) that form the annual price delivery framework.
- Q1 (January–March) typically sets the annual range and initiates the first major directional leg.
- Q2 (April–June) often delivers the largest single move of the year in the primary direction.
- Q3 (July–September) is historically the most volatile and choppy — often a retracement or consolidation quarter.
- Q4 (October–December) typically completes the year-end delivery to the annual target.
- At each quarterly shift (Jan, Apr, Jul, Oct), identify the prior quarter high/low and determine which side holds the next liquidity target.
What Are ICT Seasonal Tendencies?
ICT seasonal tendencies are the macro-level delivery patterns that describe how the algorithm tends to distribute price across the four quarters of the calendar year. This concept sits within the IPDA (Interbank Price Delivery Algorithm) framework — specifically the idea that institutional delivery follows predictable seasonal cycles tied to the calendar quarter.
The key insight is that the algorithm does not deliver price randomly across the year. It follows a seasonal template where certain quarters are characterised by expansion (trending delivery), others by retracement (giving back some of the prior move), and others by consolidation (building the liquidity needed for the next leg). Understanding which quarterly phase you are in gives you the macro context for every daily and weekly setup you take.
Seasonal tendencies are not predictions with guaranteed outcomes. They are statistical tendencies — patterns that occur with enough regularity that they provide a useful bias framework. They should be treated as context, not certainty. A Q3 seasonal tendency for retracement does not mean every week in Q3 is bearish. It means the macro framework during Q3 is more likely to be corrective than expansive, which influences how aggressively you trade.
The Four Quarterly Shift Points
The four IPDA quarterly shifts occur at the calendar quarter boundaries: approximately January 1 (Q1 open), April 1 (Q2 open), July 1 (Q3 open), and October 1 (Q4 open). At each shift, the algorithm resets its delivery framework for the new quarter.
At each quarterly shift, ICT traders identify the prior quarter high (Q-high) and the prior quarter low (Q-low). These levels represent the BSL above and SSL below the prior quarter’s range. The question at each shift is: will the new quarter expand above the Q-high (targeting BSL) or below the Q-low (targeting SSL)?
The answer comes from the higher timeframe bias — the annual trend, the position relative to the prior year high/low, and the monthly structure. In a bullish year, Q-highs are sequentially targeted — each new quarter breaks above the prior quarter high. In a bearish year, Q-lows are sequentially targeted.
Q1 and Q2: The Primary Delivery Quarters
Q1 (January through March) is the setup quarter. The new year opens with fresh annual range formation. The January 1 opening price is a critical algorithmic reference — the algorithm uses it as the anchor for the year’s delivery. Price typically forms the initial directional bias during January, often consolidating through February, then making the first significant structural break in late February or early March.
Q2 (April through June) is historically the most productive delivery quarter for the primary annual trend. The Q2 expansion typically delivers the largest single directional leg of the year. In bullish years, Q2 is where the majority of the annual gains occur. In bearish years, Q2 is often where the most significant decline happens. If you are tracking the annual bias correctly, Q2 provides the highest-conviction trend-following opportunities.
The practical application: in Q1, be patient and let the annual range form. Do not over-trade the January consolidation. By February, the bias should be clearer. Use March to position for the Q2 expansion. When Q2 begins, you should have a clear HTF bias and a draw on liquidity identified — the Q2 expansion is your opportunity to ride the primary leg with the largest position size of the year.
Q3 and Q4: Retracement and Year-End Delivery
Q3 (July through September) is the most difficult quarter to trade. ICT teaching consistently emphasises that Q3 tends to be choppy, volatile, and retracement-oriented. The summer months bring reduced institutional participation (many institutional traders are on reduced activity during August), and the algorithm uses this period to retrace some of the Q2 gains and rebalance FVGs left during the Q2 expansion.
During Q3, reduce position sizing, tighten criteria for trade selection, and avoid fighting the seasonal chop. The appropriate response to Q3 is defensive — protect profits from Q2, wait for the quarterly shift to Q4, and prepare the analysis for the year-end delivery.
Q4 (October through December) is the second major delivery quarter. The year-end institutional window drives delivery toward the annual target. In bullish years, Q4 often recovers from the Q3 retracement and delivers a new high for the year. In bearish years, Q4 continues the decline toward the annual low. The Q4 delivery is also influenced by portfolio rebalancing (institutional year-end book squaring) that creates strong directional pressure in October and November.
Building Your Seasonal Bias: A Quarterly Workflow
At the start of each quarter, before looking at any intraday chart, complete the following macro assessment. First, identify where price sits relative to the prior year’s high and low. If price is in the lower half of the annual range, the macro context is discount — bullish quarterly delivery is more probable. If price is in the upper half, the macro context is premium — the algorithm may be distributing toward the annual target before any retracement.
Second, mark the prior quarter’s high and low. These are the BSL (above the Q-high) and SSL (below the Q-low) for the new quarter. Determine which level the current quarter is more likely to target first based on the annual bias: in a bullish year, the new quarter typically opens by targeting the prior Q-high as BSL before delivering higher. In a bearish year, the new quarter typically targets the prior Q-low as SSL first.
Third, note the quarterly shift date. The first trading day of the new quarter is the reset — the algorithm references the new quarter open price for the IPDA delivery framework. Mark this price on your chart. The relationship between price and this quarterly open will tell you throughout the quarter whether the delivery is running above or below the quarterly algorithmic reference.
Seasonal Tendencies by Instrument
While the Q1-Q4 framework applies broadly, specific instruments have their own seasonal nuances within that framework. Equity indices (NQ, ES) tend to follow the classic pattern most closely — strong Q1 and Q2, choppy Q3, strong Q4 year-end rally. This is partly structural (institutional calendar effects, year-end window dressing) and partly because equity indices are the most heavily studied instruments in the ICT community.
Gold (XAUUSD) has its own seasonal tendencies that partially diverge from equities. Gold tends to be strong in Q1 (January effect as investors add gold to portfolios at year-start) and Q4 (year-end safe-haven demand and central bank purchasing). Q3 is historically weak for gold as summer reduces institutional activity across all markets. These gold seasonals align partially with the ICT Q3 caution framework but have their own commodity-specific drivers.
Forex pairs introduce another dimension: currency seasonality driven by trade flows and central bank activity. EURUSD tends to see euro strength in Q1 and Q4 as European institutional activity peaks at the calendar extremes. These currency seasonals add a layer of confirmation (or contradiction) to the directional seasonal bias — when the forex seasonal aligns with the IPDA quarterly framework, the probability of the directional move increases.
Watch: ICT Seasonal Tendencies — The Quarterly Delivery Framework
Original ICT teaching from the Inner Circle Trader YouTube channel.
Frequently Asked Questions
Are seasonal tendencies reliable enough to trade?+
Seasonal tendencies provide macro context, not trade signals. They tell you the likely character of a quarter — expansive, retracement, or consolidation — which shapes how aggressively you trade and which direction you favour. Within Q2 (historically expansive), you trade larger and look for trend-following entries. Within Q3 (historically choppy), you trade smaller and are more selective. The tendency frames your posture, not your entry.
Do seasonal tendencies apply to all markets?+
The quarterly framework applies most strongly to equity indices (NQ, ES, SPY) and currency pairs where institutional participation is globally coordinated. Commodities have their own seasonal patterns (gold tends to be strong in Q1 and Q4; crude oil has different seasonality). ICT applies the quarterly framework primarily to the instruments he trades — currencies and equity indices.
What happens when Q3 behaves like Q2 (strongly trending)?+
It occurs, particularly in years with strong macro catalysts (major policy shifts, geopolitical events). When Q3 does trend strongly, it typically indicates that the annual delivery is more powerful than normal and the Q3 retracement was compressed or skipped. In this case, recalibrate — the annual target may be further than the standard Q4 level you had identified.
How do you identify the annual target at the start of Q1?+
At Q1 open, mark the prior year high and prior year low. In a bullish year, the BSL target is the prior year high and potentially the all-time high above it. In a bearish year, the SSL target is the prior year low and potentially multi-year lows below. The quarterly delivery plan is then about which quarterly legs will take price toward that annual target.
Where does ICT teach seasonal tendencies?+
The quarterly shift and seasonal tendency concepts are taught extensively in the ICT 2022 Mentorship playlist on the @InnerCircleTrader YouTube channel. Search for "quarterly shift" and "seasonal tendencies" within that playlist. The concepts are also embedded throughout the IPDA teaching that runs throughout the mentorship series.
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