Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.44% 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 0.07% , well below the first standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and 1 for price indexation. This means that we are in the middle 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. As we can see in the chart below, all USD/JPY MAs are still in bullish sentiment. In the event of a decline, the monthly MA can be an important support for the exchange rate.
Since our last analysis, we have witnessed higher upward trend, even though the price is lower. It did not exceed 4 days. The total maximum in the measured period (last 3 years) is 6 days. Downward trends did not exceed more than 3 days in the same period. The total maximum for the last 3 years is 7 days. We could use the average long-term ATR (Average True Range) obtained from daily data (0.54% ) to estimate Stop Loss orders for our positions. The current value is 0.35% , which is below average. Approximately 90% confidence interval (return between -1.00% and 1.00% ) 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.
The basic technical analysis points to side trading. The exchange rate is currently very close to the Fibonacci retracement level of 78.60 , the psychological level of 110.00 and the short-term moving average, which could act as resistance in the event of further growth. The divergence between pair development and the RSI, which was created in July/August, also supports this scenario. The demand zone (green rectangle) looks like an important area.