Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.41% and -0.41% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.20% and -0.20% . Yesterday´s return was only 0.10% , well below the first standard deviation. Our scoring is currently very positive (3 ) for the month-on-month change and 0 for price indexation. This means that we are in the last extreme positive phase of the cycle according to the indexation. Both scorings range from -3 up to 3 . The development of the estimated cycles based on our analytical systems 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. According to the short-term and medium-term MAs, USD/CAD is finally in bullish sentiment. In the event of further growth, the annual MA could be an important resistance for the exchange rate.
There have been more upward trends since our last analysis, with a maximum of 3 days. The maximum in the measured period is 7 days. Downward trends did not exceed more than 1 day in the same period. However, the maximum in the measured period is 5 days. We could use the average long-term ATR (Average True Range) obtained from daily data (0.68% ) to estimate Stop Loss orders for our positions. The current value is 0.70% , which is almost the same. Approximately 90% confidence interval (return between -0.90% and 0.90% ) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (1.40% ) to estimate Profit Targets, as shown in the chart below.
Basic technical analysis supports short-term bullish sentiment. In the long run, the exchange rate is still on a declining trend. We also see clear divergence between the market price of USD/CAD and the RSI that have arisen over the last 3 months. In addition, the market price is in the supply zone (red rectangle), where are also the Fibonacci retracement level of 23.60% , the psychological level of 1.2600 and currently also the long-term moving average. In the case of further growth above the zone, the psychological level of 1.3000 could be an important resistance. If the pair corrects, 1.2300 could be support.