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 -0.28% . Yesterday´s return was -0.29% , well below the first standard deviation. Our scoring is currently positive (1 ) for the month-on-month change and 0 for price indexation. This means that the indexation is in the extreme positive phase of the cycle. 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 all MAs, NZD/USD is in bullish sentiment because it is above them. In the case of a decline, quarterly and annual MAs could be the first important exchange rate supports.
There have been longer downward trends since our last analysis, with a maximum of 4 consecutive days. The maximum in the measured period is 8 days. Upward trends did not exceed more than 3 days in the same period. The maximum in the measured period is 6 days. We could use the average long-term ATR (Average True Range) obtained from daily data (0.97% ) to estimate Stop Loss orders for our positions. The current value is 0.61% , which is below the average. 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.
The basic technical analysis points to bullish sentiment since the middle of August. Dynamic drop of exchange rate was followed by the growth and therefore created bear trap. However, we can also clearly see the bearish divergence between the market price and the RSI, which moved the pair back to the long-term moving average. Further stop could be the demand zone (green rectangle), where are also the Fibonacci retracement level of 23.60% , the short-term moving average and the important psychological level of 0.7200 .