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EUR/USD statistical and technical analysis

The current price of the EUR/USD exchange rate is 1.2118 (April 28, 2021). Today, we have witnessed speeches by the two most important presidents of central banks. Lagarde for the ECB and Powell for the Fed. Let us therefore look at statistical and technical analyzes.

Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.44% and -0.45% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.22% and -0.22% . YesterdayΒ΄s return was 0.04% . Our scoring is currently neutral (2 ) for the month-on-month change and 0 for price indexation. This means that we are in the last growing phase of the cycle. Both scorings range from -3 up to 3 . The estimated cycles development based on our analytical systems is shown in the following chart.

EUR/USD 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. EUR/USD has been growing steadily in recent weeks. Therefore, as we can see in the chart below, all MAs still support bullish sentiment.

EUR/USD daily price development Source: WALFIR

Since the beginning of this year, there have been more downward trends even after considering recent growth. In the first months, a maximum of 3 consecutive days was reached. However, the upward trends did not exceed more than 2 days in the same period. We could use the average ATR (Average True Range) obtained from daily data (0.70% ) to estimate Stop Loss orders for our positions. The current value is 0.48% . Approximately 90% confidence interval (return between -1.0% and 1.0% ) is shown in the histogram below by a red rectangle.

EUR/USD daily return distribution Source: WALFIR

We could use the last decile of low to high returns (1.50% ) to estimate Profit Targets, as shown in the chart below.

EUR/USD low to high distribution Source: WALFIR

Basic technical analysis still supports longer-term bullish sentiment, as the exchange rate creates higher lows and higher highs. However, since the beginning of this year, it has been corrected. The last month could motivate the bulls again. In the short-term, this pair had very stable growth in April. However, we can clearly see a bullish divergence between the market price and the RSI, which could lead to an exchange rate correction. EUR/USD is currently close to an important psychological level of 1.2100 . In the event of a decline, the long-term and short-term moving average and Fibonacci retracement level of 23.60% could be the support for bulls. In addition, there is also the upper part of the demand zone (green rectangle).

EUR/USD 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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