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 -0.88% , well below the first standard deviation. Our scoring is currently negative (-1 ) for the month-on-month change and -3 for price indexation. This means that we are in the very first 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.
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 has risen above short-term and medium-term MAs in recent weeks. Therefore, as we can see in the chart below, all MAs support bullish sentiment.
Since our last analysis, we have witnessed more upward trends that did not exceed 4 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 3 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 (1.77% ) to estimate Stop Loss orders for our positions. The current value is 1.34% , which is below average. Approximately 90% confidence interval (return between -2.5% and 2.5% ) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (3.00% ) to estimate Profit Targets, as shown in the chart below.
The basic technical analysis currently supports short-term bullish sentiment, as the commodity price has been rising dynamically since mid-July. However, volumes increased only slightly. The XCU/USD is currently approaching the important psychological level of 4.6500 , which could be resistance to the price. The divergence between price development and the RSI could also motive short-term bears. However, the price could be supported by a short-term moving average. In the event of a further decline, the demand zone (green rectangle) could be important for bulls.