Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.30% and -1.36% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.67% and -0.62% . Friday´s return was -0.50% , well below the first standard deviation. Our scoring is currently very positive (3 ) for the month-on-month change and 3 for price indexation. It means that we are in the early positive 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.
Source: WALFIR
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. According to all MAs, XAG/USD is in bearish sentiment because it is below them. In the event of a rebound, the monthly MA may be a resistance to the market price.
Source: WALFIR
Since our last analysis , there have been more declining trends, with a maximum of 4 consecutive days. The total maximum for the downtrend for the last 3 years is 8 days. Upward trends have not exceeded more than 2 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 (2.71% ) to estimate Stop Loss orders for our positions. The current value is 2.18% , 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.
Source: WALFIR
We could use the last decile of low to high returns (4.50% ) to estimate Profit Targets, as shown in the chart below.
Source: WALFIR
The basic technical analysis points to the short-term bearish development in recent weeks. Recently, however, there has been a rebound in the lower part of the demand zone (green rectangle), where is also the Fibonacci retracement level of 38.20% and the short-term moving average. In addition, the divergence between price development and the RSI could motivate bulls to take power. In the case of a further decline, additional support for the bulls could be the psychological level of 21.00 or the Fibonacci retracement level of 50.00% .
Source: TradingView
Comments