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 -0.71% . Friday´s return was 0.48% , well below the first standard deviation. Our scoring is currently neutral (0 ) for the month-on-month change and -3 for price indexation. It is currently in a very negative phase of the cycle. Both scorings range from -3 up to 3 . The development of the estimated cycles based on our analytical system is shown in the following chart.
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 price of XPD/USD has been declining dynamically over the last month. All MAs therefore support bearish sentiment.
Source: WALFIR
Since our last analysis, we have witnessed more declining trends, with the maximum level reaching 6 consecutive days, which also represents the overall maximum in the measured period (last 3 years). The upward trends have not exceeded more than 1 day in the last period. However, the maximum in the measured period is 14 days. We could use the average long-term ATR (Average True Range) obtained from daily data (3.20% ) to estimate Stop Loss orders for our positions. The current value is 3.86% , which is slightly above average. Approximately 90% confidence interval (return between -3.0% and 3.0% ) is shown in the histogram below by a red rectangle.
Source: WALFIR
We could use the last decile of low to high returns (5.25% ) to estimate Profit Targets, as shown in the chart below.
Source: WALFIR
The basic technical analysis points to volatile development since the beginning of this year. Three short-term dynamic corrections brought the price to an important zone. XPD/USD is currently well below both moving averages. However, it is in the long-term demand zone (green rectangle), where is also the Fibonacci retracement level of 78.60% . In addition, a positive scenario could be supported by a divergence between the price development and the RSI. A further drop below the zone could result in a test of lows at the beginning of the COVID-19 pandemic.
Source: TradingView
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