Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.30% and -1.37% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.68% and -0.62% . Friday´s return was only -0.27% , well below the first standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and slightly negative -1 for price indexation. Both scorings range from -3 up to 3 . Indexing is currently testing the lows of this year. 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. XAG/USD is currently breaking over short-term MA. Therefore, as we can see in the chart below, all MAs still support bullish sentiment.
There were a more downward trends in the first quarter of this year. The following months, however, represented more upward trends that have not exceeded more than 3 consecutive days. The declining trends did not exceed more than 2 days in the same period. The total maximum for the last 3 years is 6 days for the uptrend and -8 days for the downtrend. We could use the average long-term ATR (Average True Range) obtained from daily data (3.64% ) to estimate Stop Loss orders for our positions. The current value is 1.80% . 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 (4.50% ) to estimate Profit Targets, as shown in the chart below.
Basic technical analysis points to neutral sentiment in recent weeks.XAG/USD is currently very close to the psychological level of 28.00 . The divergence between price development and the RSI could motive short-term bulls. However, there could be strong resistance at 30.00 to move further north. In the event of a further decline, the demand zone (green rectangle), where there are also the Fibonacci retracement level of 23.60% and the psychological level of 25.00 , could be strong support for the price.