March 28, 2021

XCU/USD statistical and technical analysis

Reading time:3 min

The current price of XCU/USD - Copper Spot US Dollar is 4.0785 (March 26, 2021). This commodity is currently trading close to an important psychological level. Such a high price was here even after the GFC. Therefore, we will 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. Friday´s return was 2.35%, which is more than the 1st standard deviation. Our scoring is currently neutral (0) for the month-on-month change and -2 for price indexation. Both scorings range from -3 up to 3. Indexation is currently at the same levels as in the beginning of 2021. Bulls need to see the cycle change upwards. The estimated cycles development based on our analytical systems is shown in the following chart.

Copper price indextaion and estimated cycles
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 is in bearish sentiment in the case of monthly MA, after falling below it in recent days. As we can see in the chart below, the 6 months and annual MAs support bullish sentiment.

Daily price and periodical change
Source: WALFIR

There were more upward trends, with the maximum level reaching 11 consecutive days, after a large decline also due to COVID-19. Downward trends did not exceed more than 2 days in the same period. The most negative trend in the last 3 years reached 12 consecutive days just before the decline of global markets in 2020. We could use the average annual ATR (Average True Range) obtained from daily data (1.75%) to estimate Stop Loss orders for our positions. The current value is 2.80%. 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 second chart below.

Daily return distribution
Source: WALFIR
Daily low to high distribution
Source: WALFIR

The basic technical analysis shows a slightly negative sentiment for the last month. The XCU/USD is currently very close to the psychological level of 4.00. In addition, the shorter-term MA has also recently been very close to the spot price. The divergence between price development and RSI motivated short-term bears at the end of February. The demand zone (green rectangle), where the Fibonacci retracement level of 38.20% is also, could be a strong support in the event of a further decline.

Basic technical analysis
Source: TradingView


technical analysis
Walfir Technologies

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 systems. The core of the team (Lubos Snirc and Patrik Mackovych) is involved in the Investro project. Both have experiences in global financial and investment analytics and their articles and analyzes can be found on major financial news portals.


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