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 0.67% and -0.62%. Friday´s return was -1.04% , which is below the first standard deviation. Our scoring is currently negative (-1 ) for the month-on-month change and -3 for price indexation. It means that we are in the early negative 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 XAG/USD has risen above the short-term moving average in recent weeks. In the medium and long term, however, MAs still support bearish sentiment.
Since our last analysis, there have been more declining trends, with a maximum of 3 consecutive days. The total maximum for the downtrend for the last 3 years is 8 days. Upward trends have not exceeded more than 3 consecutive days in recent months. The total maximum for the last 3 years is 5 days. We could use the average long-term ATR (Average True Range) obtained from daily data (2.80% ) to estimate Stop Loss orders for our positions. The current value is 1.60% , which is below average. Approximately 90% confidence interval (return between -3.00% and 3.00% ) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (5.00% ) to estimate Profit Targets, as shown in the chart below.
The basic technical analysis points to a slight bullish development in recent weeks. In addition, it was very important for bulls to rebound upwards from the demand zone (green rectangle), where is also the Fibonacci retracement level of 38.20% and the short-term moving average. However, the divergence between price development and the RSI could motivate bears to take power. In the case of further growth, additional resistance for the bulls could be the psychological level of 25.00 or the long-term moving average together with the Fibonacci retracement level of 23.60% and the psychological level of 26.00 .