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 -1.49% , which is slightly less than the 1st standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and 0 for price indexation. This means that we are in the very last negative 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. In the case of monthly MA, XCU/USD is clearly in bearish sentiment. The 6 months MA could be support for the price. The annual MA still supports bullish sentiment.
Source: WALFIR
Since the beginning of the year, we have witnessed more upward trends that did not exceed 6 consecutive days. The total maximum in the measured period (last 3 years) is 11 days. Downward trends in recent months have not exceeded more than 2 days. The total maximum for the last 3 years is 12 days. We could use the average annual ATR (Average True Range) obtained from daily data (1.79% ) to estimate Stop Loss orders for our positions. The current value is 3.57% , which is almost twice the average. 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
The basic technical analysis shows short-term bearish sentiment, as the price of the commodity has been declining dynamically since the beginning of May. Above average volumes have also occurred in the last 4 days. XCU/USD is currently in the demand zone (green rectangle), where are also the psychological level of 4.0000 and the Fibonacci retracement level of 23.60% . However, the divergence between price development and the RSI could motivate bulls.
Source: TradingView
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