Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.30% and -1.37% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.68% and -0.62% . Friday´s return was only -0.27% , well below the first standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and slightly negative -1 for price indexation. Both scorings range from -3 up to 3 . Indexing is currently testing the lows of this year. The development of the estimated cycles based on our analytical system 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. XAG/USD is currently breaking over short-term MA. Therefore, as we can see in the chart below, all MAs still support bullish sentiment.
Source: WALFIR
There were a more downward trends in the first quarter of this year. The following months, however, represented more upward trends that have not exceeded more than 3 consecutive days. The declining trends did not exceed more than 2 days in the same period. The total maximum for the last 3 years is 6 days for the uptrend and -8 days for the downtrend. We could use the average long-term ATR (Average True Range) obtained from daily data (3.64% ) to estimate Stop Loss orders for our positions. The current value is 1.80% . Approximately 90% confidence interval (return between -3.0% and 3.0% ) is shown in the histogram below by a red rectangle.
Source: WALFIR
We could use the last decile of low to high returns (4.50% ) to estimate Profit Targets, as shown in the chart below.
Source: WALFIR
Basic technical analysis points to neutral sentiment in recent weeks.XAG/USD is currently very close to the psychological level of 28.00 . The divergence between price development and the RSI could motive short-term bulls. However, there could be strong resistance at 30.00 to move further north. In the event of a further decline, the demand zone (green rectangle), where there are also the Fibonacci retracement level of 23.60% and the psychological level of 25.00 , could be strong support for the price.
Source: TradingView
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