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XCU/USD statistical and technical analysis

The change in inventories in the London Metal Exchange (LME) warehouses is positive again after 3 weeks. If it further rises, the market price could continue its short-term decline. The current price of XCU/USD - Copper Spot US Dollar is 4.343 (September 13, 2021). Therefore, we will 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 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% . Today´s return is -1.98% , whish is slightly above the first standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and -1 for price indexation. This 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 systems is shown in the following chart.

XCU/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. XCU/USD has risen above short-term and medium-term MAs in recent days. Therefore, as we can see in the chart below, all MAs support bullish sentiment.

XCU/USD daily price development Source: WALFIR

Since our last analysis, we have witnessed more downward trends that did not exceed 3 consecutive days. The total maximum in the measured period (last 3 years) is 12 days. Also, upward trends in recent months have not exceeded more than 3 days. The total maximum for the last 3 years is 11 days. We could use the average long-term ATR (Average True Range) obtained from daily data (1.75% ) to estimate Stop Loss orders for our positions. The current value is 3.67% , which is more than twice the average. Approximately 90% confidence interval (return between -2.5% and 2.5% ) is shown in the histogram below by a red rectangle.

XCU/USD daily return distribution 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.

XCU/USD daily low to high distribution Source: WALFIR

The basic technical analysis currently supports short-term bullish sentiment, as the price of the commodity rises after it has dynamically rebounded from the demand zone (green rectangle), where is also the psychological level of 4.0000 . The XCU/USD is currently very close to the short-term moving average, which currently acts as a support. The divergence between price development and the RSI also supports this scenario.

XCU/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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