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.
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.
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.
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 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.