Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.47% and -1.53% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.75% and -0.70% . Friday´s return was -1.61% , which is below the first standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and 0 for price indexation. It is currently in an extremely declining 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.
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 price of XPD/USD has decreased in the last month. Therefore, all MAs support bearish sentiment.
Since our last analysis, we have witnessed more declining trends, with the maximum level reaching 4 consecutive days. The total maximum in the measured period (last 3 years) is 5 days. The upward trends did not exceed more than 3 days in the same period. However, the maximum in the measured period is 14 days. We could use the average long-term ATR (Average True Range) obtained from daily data (3.08% ) to estimate Stop Loss orders for our positions. The current value is 4.41% , which is significantly above average as the volatility rises. Approximately 90% confidence interval (return between -3.0% and 3.0% ) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (5.25% ) to estimate Profit Targets, as shown in the chart below.
The basic technical analysis points to volatile development since the beginning of this year. Two short-term dynamic corrections brought the price to an important zone. XPD/USD is currently below both moving averages. However, it is in the long-term demand zone (green rectangle), where is also the Fibonacci retracement level of 50% . In addition, a positive scenario could be supported by a divergence between the price development and the RSI. A further drop below the zone could be critical for the bulls.