Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.54% 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 0.43% , which is still below the first standard deviation. Our scoring is currently negative (-1 ) for the month-on-month change and -3 for price indexation. This means that we are in the last negative phase of the cycle. Both scorings range from -3 up to 3 . The development of the estimated cycles based on our analytical systems is shown in the following chart.
Source: WALFIR
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 all MAs, AUD/USD is in bearish sentiment, after falling below it last week. 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.
Source: WALFIR
Since our last analysis, there have been more upward trends. Last summer reached a maximum of 7 consecutive days. Downward trends did not also exceed more than 3 days in the same period. However, the maximum in the measured period is 11 days. We could use the average long-term ATR (Average True Range) obtained from daily data (1.03% ) to estimate Stop Loss orders for our positions. The current value is 0.54% . Approximately 90% confidence interval (return between -1.2% and 1.2% ) is shown in the histogram below by a red rectangle.
Source: WALFIR
We could use the last decile of low to high returns (1.75% ) to estimate Profit Targets, as shown in the chart below.
Source: WALFIR
Basic technical analysis still supports longer-term bullish sentiment, as the exchange rate creates higher highs and higher lows. This pair traded sideways with the support of a short-term moving average and a psychological level of 0.7700 . However, we can also clearly see a bullish divergence between the market price and the RSI. AUD/USD volumes were also above average in mid-May. In the event of a decline, the longer-term moving average and the psychological level of 0.7600 could be a strong support for bulls.
Source: TradingView
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