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XAG/USD statistical and technical analysis

Rising inflation around the world could motivate bulls in precious metals. However, if global stock markets fall, we may also see a correlated decline in metals. The current price of XAG/USD - Silver Spot US Dollar is 23.85 (October 29, 2021). So let’s move on to statistical and technical analyzes.

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 0.67% and -0.62%. Friday´s return was -1.04% , which is below the first standard deviation. Our scoring is currently negative (-1 ) for the month-on-month change and -3 for price indexation. It means that we are in the early negative phase of the cycle. Both scorings range from -3 up to 3 . The development of the estimated cycles based on our analytical system is shown in the following chart.

XAG/USD daily price indexation 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. The XAG/USD has risen above the short-term moving average in recent weeks. In the medium and long term, however, MAs still support bearish sentiment.

XAG/USD daily price development Source: WALFIR

Since our last analysis, there have been more declining trends, with a maximum of 3 consecutive days. The total maximum for the downtrend for the last 3 years is 8 days. Upward trends have not exceeded more than 3 consecutive days in recent months. The total maximum for the last 3 years is 5 days. We could use the average long-term ATR (Average True Range) obtained from daily data (2.80% ) to estimate Stop Loss orders for our positions. The current value is 1.60% , which is below average. Approximately 90% confidence interval (return between -3.00% and 3.00% ) is shown in the histogram below by a red rectangle.

XAG/USD daily return distribution Source: WALFIR

We could use the last decile of low to high returns (5.00% ) to estimate Profit Targets, as shown in the chart below.

XAG/USD daily low to high distribution Source: WALFIR

The basic technical analysis points to a slight bullish development in recent weeks. In addition, it was very important for bulls to rebound upwards from the demand zone (green rectangle), where is also the Fibonacci retracement level of 38.20% and the short-term moving average. However, the divergence between price development and the RSI could motivate bears to take power. In the case of further growth, additional resistance for the bulls could be the psychological level of 25.00 or the long-term moving average together with the Fibonacci retracement level of 23.60% and the psychological level of 26.00 .

XAG/USD basic technical analysis Source: TradingView

WALFIR Technologies is one of the three divisions of WALFIR s.r.o., which is based in Slovakia. The primary interests of this division are analytical, quantitative, and algorithmic...

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