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XAU/USD statistical and technical analysis

After a positive development at the beginning of the week, almost all weekly gold gains were hammered down on Friday. However, it is still above an important level of support. The current price of XAU/USD - Gold Spot US Dollar is 1 767 (October 15, 2021). Let’s now look at statistical and technical analyzes.

Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.76% and -0.77% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.40% and -0.36% . Friday´s return was -1.58% , which is above the first standard deviation. Our scoring is currently slightly positive (1 ) for the month-on-month change and 0 for price indexation. Both scorings range from -3 up to 3 , which means that we estimate the middle of the growing phase of the cycle. The development of the estimated cycles based on our analytical system is shown in the following chart.

XAU/USD daily price indexation 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. The XAU/USD rose again above the short-term MA this week. Therefore, as we can see in the chart below, only medium and long-term MAs currently support bearish sentiment.

XAU/USD daily price development Source: WALFIR

Since our last analysis, we have witnessed more upward trends, with the maximum level reaching 2 consecutive days. However, the maximum increase was 8 days in the measured period. The downward trend in recent weeks have not exceeded more than 2 days. The maximum for the last 3 years is 6 days. We could use the average long-term ATR (Average True Range) obtained from daily data (1.40% ) to estimate Stop Loss orders for our positions. The current value is 1.31% , which is almost average. Approximately 90% confidence interval (return between -1.6% and 1.6% ) is shown in the histogram below by a red rectangle.

XAU/USD daily return distribution Source: WALFIR

We could use the last decile of low to high returns (2.50% ) to estimate Profit Targets, as shown in the chart below.

XAU/USD daily low to high distribution Source: WALFIR

Basic technical analysis still supports short-term bearish sentiment after Friday’s dynamic decline. XAU/USD is currently again very close to the support level of 1 760 , where is also the Fibonacci retracement level of 50.00% . The price is also below short-term and long-term moving averages. In addition, there is a divergence between price development and the RSI that could support this scenario. If it continues to decline, the demand zone (green rectangle), where are also the Fibonacci retracement level of 61.80% and the psychological level of 1 700 , could also provide some support for the bulls, as in March and early August.

XAU/USD basic technical analysis Source: TradingView

WALFIR Technologies is one of the three divisions of WALFIR s.r.o., which is based in Slovakia. The primary interests of this division are analytical, quantitative, and algorithmic...

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