There are many uncertainties and tensions in global markets (inflation, rates hikes, eastern Europe political tensions…) that could increase the volatility of this commodity. The current price of XAG/USD – Silver Spot US Dollar is 23.57 (February 11, 2021). So, let’s move on to statistical and technical analyzes.
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 1.67%, which is slightly below the first standard deviation. Our scoring is currently positive (1) for the month-on-month change and 1 for price indexation. It means that we are in a slightly 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.
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 the monthly MA, XAG/USD is in a bearish sentiment. Short-term moving averages could support the market price.
Since our last analysis, there have been more rising trends, with a maximum of 4 consecutive days. The total maximum for the upward trends for the last 3 years is 5 days. Downward trends have not exceeded more than 5 consecutive days in recent months. The total maximum for the last 3 years is 8 days. We could use the average long-term ATR (Average True Range) obtained from daily data (2.46%) to estimate Stop Loss orders for our positions. The current value is 3.16%, 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 (4.50% ) to estimate Profit Targets, as shown in the chart below.
The basic technical analysis points to the sideways development in recent months. 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. Both could currently act as market price support. In addition, the XAG/USD is again trying to move up from the zone. However, the long-term moving average and psychological level at 25.00 could be strong short-term resistance for the bulls.