Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.76% and -1.96%, respectively. The estimated daily return in both directions based on their probability of occurrence is 0.91% and -0.93% . Friday´s return was 0.93% , well below the first standard deviation. Our scoring is currently positive (3 ) for the month-on-month change and 0 for price indexation. Therefore, it is currently in a positive extreme phase of the cycle. Both scorings range from -3 up to 3 . The estimated development of 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. As we can see in the chart below, all WTI MAs currently support bullish sentiment. In the event of a decline, the monthly MA may be the price support.
Source: WALFIR
Since our last analysis, there have been stronger downward trends with a maximum level of 6 consecutive days, even the market price is currently higher. The maximum for the last 3 years is 11 days. Upward trends did not exceed more than 3 days in the same period. However, the maximum increase was 8 days in the measured period. We could use the average long-term ATR (Average True Range) obtained from daily data (3.32% ) to estimate Stop Loss orders for our positions. The current value is 2.33% , which is below the average. Approximately 90% confidence interval (return between -3.60% and 3.60% ) is shown in the histogram below by a red rectangle.
Source: WALFIR
We could use the last decile of low to high returns (6.00% ) to estimate Profit Targets, as shown in the chart below.
Source: WALFIR
The basic technical analysis points to a positive short-term sentiment after rebounding from the demand zone (green rectangle), where is also the Fibonacci retracement level of 23.60% , along with the psychological level of 60.00 . The short-term MA also supported the WTI last week. However, there is a divergence between price development and the RSI that has developed in recent months. The psychological level of 77.00 could be an important resistance if the market price rises higher.
Source: TradingView
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