Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.45% and -0.44% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.22% and -0.22% . Yesterday´s return was 0.12% . Our scoring is currently negative (0 ) for the month-on-month change and -2 for price indexation. This means that the periodic change is close to its average and indexation in the slightly 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. In the case of monthly MA, USD/JPY is in bearish sentiment again after falling below it. As we can see in the chart below, the longer-term MAs are still in bullish sentiment.
Since the beginning of 2021 , there have been more upward trends, where we have also recorded a medium-term maximum of 6 consecutive days. Downward trends did not exceed more than 3 days in the same period. However, the maximum decrease was 7 days in the measured period. We could use the average long-term ATR (Average True Range) obtained from daily data (0.56% ) to estimate Stop Loss orders for our positions. The current value is 0.57% . 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 chart below.
Basic technical analysis shows a stabilization phase between 108.00 and 110.00 or Fibonacci retracement levels of 61.80% and 78.60% in the last 2 months. The USD/JPY is currently in the demand zone (green rectangle), where there is also the short-term moving average that is acting as resistance now. However, the divergence between pair development and the RSI that has been created since the beginning of this year could motivate bulls and push the exchange rate above the demand zone.