Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.55% and -0.58%, respectively. The estimated daily return in both directions based on their probability of occurrence is 0.28% and -0.27% . Yesterday´s return was only 0.04% . Our scoring is currently neutral (0 ) for the month-on-month change and 1 for price indexation. This means that we are in a slightly positive phase of the cycle. Both scorings range from -3 up to 3 . The estimated cycles development based on our analytical systems is shown in the following chart.
Different moving averages (MAs) help us better identify trends across multiple time frames. We use 3 basic MAs to find out which sentiment dominates each horizon. The purple line represents the monthly , the green line the 6 months and the yellow line the annual moving average. According to the monthly MA, AUD/USD is in bearish sentiment, after falling below it. As we can see in the chart below, the 6 months and annual MAs are still in bullish sentiment. In the event of a decline, the 6-month MA can be an important support for the exchange rate.
Since the outbreak of the COVID-19 epidemic, there have been more upward trends. Last summer, a maximum of 7 consecutive days was reached. Downward trends did not exceed more than 5 days in the same period. The maximum in the measured period is 11 days. We could use the average ATR (Average True Range) obtained from daily data (1.23% ) to estimate Stop Loss orders for our positions. The current value is 0.59% . Approximately 90% confidence interval (return between -1.2% and 1.2% ) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (1.75% ) to estimate Profit Targets, as shown in the chart below.
Basic technical analysis still supports longer-term bullish sentiment, as the exchange rate creates higher lows and higher highs. This pair is in a short-term correction. However, we can clearly see a bullish divergence between the market price and the RSI. At the beginning of the month, the volumes were also above average. The AUD/USD is currently close to an important psychological level of 0.7600 , which could be a support for this pair. In the event of a further decline, the longer-term moving average, the psychological level of 0.7400 and the Fibonacci retracement level of 23.60% could be a strong support for bulls.