Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.25% and -1.20% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.63% and -0.58% . Friday´s return was 3.18% , which is more than the 1st standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and 3 for price indexation. This means that in the case of indexation, we are in a very positive growth phase of the cycle. Both scorings range from -3 up to 3 . The development of the estimated cycles based on our analytical systems 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. XCU/USD broke over the short-term MA in April. Therefore, as we can see in the chart below, all MAs still support bullish sentiment
Source: WALFIR
Since the outbreak of the COVID-19 pandemic, we have witnessed more upward trends that did not exceed 11 consecutive days. Downward trends did not exceed more than 5 days in the same period. The most negative trend in the last 3 years reached 12 consecutive days just before the decline of global markets in 2020 . We could use the average annual ATR (Average True Range) obtained from daily data (1.68% ) to estimate Stop Loss orders for our positions. The current value is 0.78% . Approximately 90% confidence interval (return between -2.5% and 2.5% ) is shown in the histogram below by a red rectangle.
Source: WALFIR
We could use the last decile of low to high returns (3.00% ) to estimate Profit Targets, as shown in the chart below.
Source: WALFIR
Basic technical analysis still supports bullish sentiment, as the price of a commodity creates higher lows and higher highs. XCU/USD is currently very close to the all-time highs around 4.6500 . The shorter-term MA has very well supported the spot price for the last year. In addition, there is still high upward momentum. However, the divergence between price development and the RSI could motivate bears. In such a case, the demand zone (green rectangle) could be a strong support, where are also the psychological level of 4.0000 and the Fibonacci retracement level of 23.60% .
Source: TradingView
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