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 0.23% , well below the first standard deviation. Our scoring is currently negative (-1 ) for the month-on-month change and -2 for price indexation. This means that we are in the negative 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.
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 short-term MA, AUD/USD is in a bullish sentiment because it acts as exchange rate support. In the case of growth, longer-term MAs could be an important resistance for the pair.
Since our last analysis, there have been more downward trends with a maximum of 4 consecutive days. However, the total maximum in the measured period is 11 days. The upward trends did not exceed more than 3 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 (0.93% ) to estimate Stop Loss orders for our positions. The current value is 0.69% , which is slightly below the average value. 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 medium-term bearish sentiment as the exchange rate creates lower lows and lower highs. This pair again fell below the important psychological level of 0.7400 , where is also the Fibonacci retracement level of 23.60% . AUD/USD is also very close to the short-term moving average. We can also clearly see the bearish 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 again be as important for bulls as in August.
Comments