Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.54% and -0.57% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.28% and -0.27% . Yesterday´s return was -0.16% , well below the first standard deviation. Our scoring is currently positive (2 ) for the month-on-month change and 2 for price indexation. This means that we are in the positive phase of the cycle in both scorings, which 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 a bearish sentiment because it is below them. In the event of growth, the monthly MA could be the first important resistance for the exchange rate.
Source: WALFIR
Since our last analysis, there have been more downward trends with a maximum of 3 consecutive days. However, the total maximum in the measured period is 11 days. The upward trends did not exceed more than 4 days in the same period with a maximum in the total measured period of 7 days. We could use the average long-term ATR (Average True Range) obtained from daily data (0.96% ) to estimate Stop Loss orders for our positions. The current value is 0.78 %, which is almost an average value. 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 short-term bearish sentiment as the exchange rate creates lower lows and lower highs. This pair fell below an important psychological level of 0.7600 last month. It is currently also below the 0.7400 level, where is also the Fibonacci retracement level of 23.60% . However, we can also clearly see the bullish divergence between the market price and the RSI. In the event of a further decline, the demand zone (green rectangle) with the Fibonacci retracement level of 38.20% and the psychological level of 0.7000 could be important for bulls.
Source: TradingView
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