Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.48% and -1.53% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.75% and -0.70% . Friday´s return was 1.34% . Our scoring is currently neutral (0 ) for the month-on-month change and 0 for price indexation. Both scorings range from -3 up to 3 . Indexation is currently in the last growth phase of the cycle. Therefore, the scores are zero in both cases. That means that the bulls should wait for a better time before entering the position, or at least be more careful. The estimated cycles development based on our analytical system 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. The XPD/USD rebounded dynamically upwards in March. Therefore, as we can see in the chart below, all MAs still support bullish sentiment.
Over the last month, we have witnessed more growing trends, with the maximum level reaching 6 consecutive days. However, the total maximum in the measured period (last 3 years) is 14 days. The downward trends did not exceed more than 2 days in the same period. The maximum since the outbreak of the COVID-19 pandemic is 5 days. We could use the average annual ATR (Average True Range) obtained from daily data (3.72% ) to estimate Stop Loss orders for our positions. The current value is 2.73% . Approximately 90% confidence interval (return between -3.0% and 3.0% ) is shown in the histogram below by a red rectangle.
We could use the last decile of low to high returns (5.25% ) to estimate Profit Targets, as shown in the chart below.
The basic technical analysis points to positive sentiment, as the price is currently testing the overall highs. The XPD/USD has broken above this year’s high, and if it continues to rise, the psychological level of 3 000 could be strong resistance. However, if the price does not break the maximum and on the contrary starts to fall, the next stop could be the psychological level at 2 500 or the demand zone (green rectangle), where the Fibonacci retracement level of 23.60% is also, along with a long-term moving average. In addition, a divergence between the price development and the RSI created in the last 2 months could support this scenario.