Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.76% and -1.95% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.91% and -0.93% . Friday´s return was 3.12% , well below the first standard deviation. Our scoring is currently negative (-1 ) for the month-on-month change and -1 for price indexation. Therefore, it is currently in a slightly negative 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.
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.
Since our last analysis, there have been stronger upward trends with a maximum level of 4 consecutive days. The maximum for the last 3 years is 8 days. Downward trends did not exceed more than 2 days in the same period. However, the maximum decrease was 11 days in the measured period. We could use the average long-term ATR (Average True Range) obtained from daily data (3.11% ) to estimate Stop Loss orders for our positions. The current value is 2.85% , which is slightly below the average. Approximately 90% confidence interval (return between -3.60% and 3.60% ) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (6.00% ) to estimate Profit Targets, as shown in the chart below.
The basic technical analysis points to positive sentiment this year, as the market price is creating higher highs and higher lows. The last uptrend leg rose by more than 20 USD after a rebound from the demand zone (green rectangle), where is also the psychological level of 60.00 . However, there is a bearish divergence between price development and the RSI that has developed in recent months. The psychological level of 77.00 along with the short-term MA could be an important support if the market price falls lower.