Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.04% and -1.06% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.53% and -0.51% . Friday´s return was -4.18% , which is almost the third standard deviation. It was a very negative day for this commodity. Our scoring is currently very negative (-3 ) for the month-on-month change and 0 for price indexation. Both scorings range from -3 up to 3 . Indexation is currently in the extreme of a declining phase of the cycle. 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. As we can see in the chart below, all XPT/USD MAs currently support bearish sentiment. In the event of growth, monthly and 6-month MAs can be the price resistance.
Source: WALFIR
Since our last analysis, we have witnessed higher downward trends. They did not exceed 5 days. The total maximum in the measured period (last 3 years) is 7 days. Upward trends did not exceed more than 4 days in the same period. The total maximum for the last 3 years is 6 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 4.02% , which is above average. Approximately 90% confidence interval (return between -2.40% and 2.40% ) is shown in the histogram below by a red rectangle.
Source: WALFIR
We could use the last decile of low to high returns (3.60% ) to estimate Profit Targets, as shown in the chart below.
Source: WALFIR
Since the beginning of this year, the basic technical analysis has supported bearish sentiment as the commodity price creates lower lows and lower highs. However, the market price is currently in an important area of the demand zone (green rectangle), where are the Fibonacci retracement level of 50.00% and the psychological level of 1 000.00 . In addition, there is a divergence between the price development and the RSI created since September. However, if the price falls below the zone, we can see new lows of the year.
Source: TradingView
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