Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.58% and -0.60% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.30% and -0.29% . Yesterday´s return was 0.55% . Our scoring is currently neutral (0 ) for the month-on-month change and 2 for price indexation. This means that we are in the positive 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.
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. The NZD/USD has continued to rise in recent weeks. Therefore, as we can see in the chart below, all MAs still support bullish sentiment.
Since the outbreak of the COVID-19 epidemic, there have been more upward trends. Last summer, a maximum of 6 consecutive days were reached. Downward trends did not exceed more than 5 days in the same period. The maximum in the measured period are 7 days. We could use the average ATR (Average True Range) obtained from daily data (1.16% ) to estimate Stop Loss orders for our positions. The current value is 0.97% . Approximately 90% confidence interval (return between -1.2% and 1.2% ) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (2.00% ) to estimate Profit Targets, as shown in the chart below.
Basic technical analysis still supports longer-term bullish sentiment, as the exchange rate creates higher lows and higher highs. This pair was in a short-term correction in March after extreme volumes occurred. However, we can clearly see a bullish divergence between the market price and the RSI, which helped the pair rise again. The NZD/USD is currently close to an important psychological level of 0.7200 , which could be a resistance for this pair. In the event of a decline, the longer-term moving average, the psychological level of 0.7000 and the Fibonacci retracement level of 23.60% could be a strong support for bulls.