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XCU/USD statistical and technical analysis

The change in inventory by LME warehouses is still negative after almost a month. The negative correlation of this indicator thus confirms the positive momentum of the price for the last month. The current price of XCU/USD - Copper Spot US Dollar is 4.526 (October 22, 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 -1.32% , which is slightly below the first standard deviation. Our scoring is currently very negative (-3 ) for the month-on-month change and -3 for price indexation. This means that we are in the extreme 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.

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. The XCU/USD rose above short-term and medium-term MAs last week. 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 upward trends that did not exceed 2 consecutive days. The total maximum in the measured period (last 3 years) is 11 days. Also, 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 long-term ATR (Average True Range) obtained from daily data (1.83% ) to estimate Stop Loss orders for our positions. The current value is 2.75% , which is more than 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 points to a sideways trending since March this year. The channel ranges from approximately 4.000 USD up to 4.800 USD. The lower boundary of channel is formed by the psychological level and the demand zone (green rectangle). The upper limit of channel is also formed by the psychological level and the supply zone (red rectangle). The XCU/USD is currently above the short-term and long-term moving averages, which could act as supports.

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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