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GBP/USD statistical and technical analysis

The current price of the GBP/USD exchange rate is 1.3895 (March 16, 2021). This pair has rebounded from an important short-term level today. Therefore, we will look at statistical and technical analyzes.

Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.43% and -0.43% , respectively. Yesterdayยดs return was -0.15% . Our scoring is currently neutral (0) for the month-on-month change and -2 for price indexation. . Both scorings range from -3 up to 3 . An indexation bottom below -0.8 could be an opportunity for bulls. The estimated cycles development based on our analytical systems is shown in the following chart.

Price indextaion and estimated cycles 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. GBP/USD is in bearish sentiment in the case of monthly MA, after falling below it. As we can see in the chart below, the 6 months and annual MAs are still in bullish sentiment..

Daily price and periodical change Source: WALFIR

Since September 2020, there have been upward trends that have not exceeded more than 4 consecutive days. Downward trends did not exceed more than 2 days in the same period. We could use the average long-term ATR (Average True Range) obtained from daily data (0.85% ) to estimate Stop Loss orders for our positions. The current value is 0.71% . Approximately 90% confidence interval (return between -1% and 1% ) is shown in the histogram below by a red rectangle. We could use the last decile of low to high returns (1.50% ) to estimate Profit Targets, as shown in the second chart below.

Daily return distribution Source: WALFIR Daily low to high distribution Source: WALFIR

Basic technical analysis still supports bullish sentiment, as the exchange rate creates higher lows and higher high. However, EUR/USD is currently also close to the demand zone (green rectangle) with a strong bottom, where the Fibonacci retracement level of 38.20% is. In addition, the shorter-term MA has also recently been very close to the exchange rate. Volumes are slowing down. The divergence between price development and RSI could also motivate short-term bulls and bring the upward rebound to a psychological level of 1.4000 or even higher to 1.4200.

Basic 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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