Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.3% and -1.37% , respectively. Friday´s return was 0.75% . Our scoring is currently positive (1 ) for the month-on-month change and 1 for price indexation. Both scorings range from -3 up to 3 . Indexation is currently creating higher lows compared to early 2021 levels. 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. XAG/USD is in bearish sentiment in the case of monthly MA, after falling below it. As we can see in the chart below, the 6 months (supported the market price twice a year) and annual MAs support bullish sentiment.
Since the early 2020, there have been more downward trends that have not exceeded more than 3 consecutive days. Upward trends did not exceed more than 2 days in the same period. In the last days of the year, however, it reached its maximum (5 days) of 2020. We could use the average annual ATR (Average True Range) obtained from daily data (3.79% ) to estimate Stop Loss orders for our positions. The current value is 2.49% . Approximately 90% confidence interval (return between -3% and 3% ) is shown in the histogram below by a red rectangle. We could use the last decile of low to high returns (4.50% ) to estimate Profit Targets, as shown in the second chart below.
Basic technical analysis points to neutral sentiment in the last week. The XAG/USD is currently very close to the demand zone (green rectangle), where the Fibonacci retracement level of 23.60% is. A psychological level of 25.00 may also be important. In addition, the shorter-term MA has also recently been very close to the spot price. It creates a kind of resistance. The divergence between price development and RSI motivated short-term bulls. However, they are currently having problems moving higher. Their sentiment may be supported by a longer-term MA, which is also in the demand zone.