Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.48% and -1.54% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.75% and -0.71% . Yesterday´s return was -0.13% , well below the first standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and 3 for price indexation. It is currently in a very positive phase of the cycle. Both scorings range from -3 up to 3 . The development of the estimated cycles based on our analytical system 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 XPD/USD rose again above the short-term MA this week. Therefore, as we can see in the chart below, only medium and long-term MAs currently support bearish sentiment.
Since our last analysis , we have witnessed several upward trends (even the price is lower) with the maximum level reaching 5 consecutive days. The maximum for the last 3 years is 14 days. However, the downward trends have not exceeded more than 4 days in the last period. However, the maximum in the measured period is 6 days. We could use the average long-term ATR (Average True Range) obtained from daily data (3.58% ) to estimate Stop Loss orders for our positions. The current value is 2.19% , which is well below average. Approximately 90% confidence interval (return between -3.0% and 3.0% ) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (5.25% ) to estimate Profit Targets, as shown in the chart below.
The basic technical analysis points to a short-term uptrend after rebounding from the psychological level of 1 600 . However, the market price is currently in the demand zone (green rectangle), where is also the Fibonacci retracement level of 23.60% , along with a short-term moving average, which could support the price. In addition, the bulls were motivated by the divergence between price developments and the RSI created in late September and mid-December.