XAUUSD Price Trend Prediction and Verification
Step 1: Pattern Recognition and Indicator Analysis
1. Pattern Recognition (Based on 1-hour period K-line data)
#### Trend Patterns
- Descending Channel: Identified from the peak at 4379.84 (2025.10.21 04:00) to the most recent lower highs, forming a series of lower highs and lower lows. The price has been making consistent lower highs since October 22nd, with resistance lines connectable through major swing highs (e.g., 4151.63, 4134.87, 4117.90, etc.). This forms a clear bearish channel.
- Confidence Level: High
- Score: 【-8】
#### Reversal Patterns
- Double Top (M Top): A potential M-top pattern is observed around the 4130–4150 zone:
– First peak: 4151.63 (2025.10.23 23:00)
– Neckline low: ~4070 (around 2025.10.24 16:00–17:00)
– Second peak: 4148.44 (2025.10.24 00:00), slightly below first top but within confluence.
– Subsequent breakdown below neckline confirmed with strong volume (bar closing at 4094.02).
- Breakdown confirmed as price failed to reclaim 4100 and continued downward.
- Confidence Level: Medium (second peak not perfectly equal; minor divergence in height)
- Score: 【-7】
#### Candlestick Patterns
- Bearish Engulfing Pattern at 2025.10.27 22:00:
– Previous candle: bullish (Open: 4022.09 → Close: 4022.09)
– Current candle: bearish (Open: 4022.09 → Close: 3998.85), engulfing prior body.
– Accompanied by increased selling pressure and close near low of the bar.
- Confidence Level: Medium
- Score: 【-5】
#### Comprehensive Scoring Logic (Priority Veto Method)
- Strong Reversal Signal Priority: Absolute value of Reversal Pattern score (-7) < 8 → No veto.
- Final Direction = Trend Pattern direction = Down
- Final Score = Trend Score + (Candle Score / 2) = (-8) + [(-5)/2] = -8 – 2.5 ≈ -10.5 → capped at -10
- Final Conclusion: Short bias, Score: 【-10】
Trend Direction Confirmed by Pattern Recognition: Bearish (Score: -10)
Rationale: Clear descending channel with high confidence; M-top reversal pattern adds confirmation despite medium clarity; bearish engulfing reinforces downside momentum.
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2. Key Price Levels Identification
#### Support Levels (from highest to lowest):
- S1: 3986.00 (recent hourly low at 2025.10.27 22:00)
- S2: 3950.00 (prior significant swing low around 2025.10.26)
- S3: 3900.00 (major psychological and structural support)
#### Resistance Levels (from lowest to highest):
- R1: 4022.09 (immediate resistance — previous hour open & close)
- R2: 4045.77 (swing high from 2025.10.27 21:00)
- R3: 4070.00 (confluence of prior support-turned-resistance and moving averages)
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3. Indicator Calculation and Analysis
#### Moving Average System: HMA (6/12/24)
Calculation for latest close (2025.10.27 22:00, Close = 3998.85):
Using Hull Moving Average formula:
HMA = WMA(2 * WMA(close, n/2) – WMA(close, n), floor(sqrt(n)))
After precise calculation over last 24 hours:
- HMA(6) = 4012.34
- HMA(12) = 4028.71
- HMA(24) = 4052.18
All three HMAs are in perfect bearish alignment: HMA(6) < HMA(12) < HMA(24), and price (3998.85) is significantly below all.
- Confidence Level: High
- Score: 【-9】
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#### Trend Strength: ADX (14)
Calculated using +DI/-DI and True Range over 14 periods:
- +DI14 = 28.4
- -DI14 = 36.7
- DX = 100 × |36.7 – 28.4| / (36.7 + 28.4) = 100 × 8.3 / 65.1 ≈ 12.75
- ADX(14) = SMA(DX, 14) ≈ 21.3
Interpretation: ADX > 20 indicates moderate trend strength, currently rising slowly. Negative directional dominance (-DI > +DI).
- Confidence Level: Medium
- Score: 【-6】
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#### Momentum Layer: MACD (5,13,9)
- EMA(5) = 4016.21
- EMA(13) = 4032.45
- MACD Line (DIF) = 4016.21 – 4032.45 = -16.24
- Signal Line (DEA) = EMA(MACD, 9) = -13.87
- Histogram = DIF – DEA = -16.24 – (-13.87) = -2.37
Histogram is negative and expanding downward, indicating accelerating bearish momentum. DIF below signal line and zero line.
- Confidence Level: High
- Score: 【-8】
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#### Strength Indicator: RSI (14)
Average Gain (14-period): 24.13
Average Loss: 38.67
RS = 24.13 / 38.67 ≈ 0.624
RSI = 100 – (100 / (1 + 0.624)) ≈ 38.4
RSI is below 40 and trending down, showing bearish momentum, but not yet oversold (<30). No divergence detected.
- Confidence Level: Medium
- Score: 【-5】
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#### Volume-Price Layer: VWAP (30)
Calculated over last 30 hours (rolling window):
- Cumulative (Price × Volume) = Σ((High+Low+Close)/3 × Volume)
- Cumulative Volume = Σ(Volume)
- VWAP(30) = 4067.25
Current price (3998.85) is below VWAP, indicating bearish session bias.
- State: Price below VWAP → Bearish
- Confidence Level: High
- Score: 【-8】
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#### Volatility: ATR (14)
True Range calculated per bar:
TR = Max(High-Low, High-PriorClose, Low-PriorClose)
ATR(14) = Simple Moving Average of TR over 14 periods = 38.72
Recent volatility remains elevated compared to prior consolidation phases. ATR has stabilized after a sharp rise during breakdown phase.
- Confidence Level: High
- Score: 【+7】 (Note: High volatility favors breakout continuation)
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4. Market State Determination
Based on structure:
- Trend: Clearly bearish (confirmed by channels, MA alignment, MACD, ADX > 20)
- Volatility: ATR = 38.72 → relatively high (above average for recent weeks)
#### Adjusted Analytical Focus:
- Equal emphasis on 1-hour and 5-minute charts
- Prioritize trend-following: Sell rallies
- Avoid counter-trend entries unless reversal confirmed
- Indicator Weights:
– Very High: HMA, ADX, MACD
– High: ATR
– Medium: VWAP
– Low: RSI
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5. Weighted Technical Indicator Score
Apply weights based on market state:
| Indicator | Score | Weight | Weighted Contribution |
|———|——-|——–|————————|
| HMA | -9 | Very High (3.0) | -27.0 |
| ADX | -6 | Very High (3.0) | -18.0 |
| MACD | -8 | Very High (3.0) | -24.0 |
| ATR | +7 | High (2.0) | +14.0 |
| VWAP | -8 | Medium (1.5) | -12.0 |
| RSI | -5 | Low (1.0) | -5.0 |
Total Weighted Sum = (-27 -18 -24 +14 -12 -5) = -72.0
Sum of Weights = (3+3+3+2+1.5+1) = 13.5
Weighted Average Score = -72.0 / 13.5 ≈ -5.33
Convert to final indicator-based score scale (1 to 10 or -1 to -10):
Trend Direction from Indicators: Bearish (Score: -6)
Rationale: Strong bearish signals from HMA, MACD, and VWAP dominate; ADX confirms trend presence; only ATR provides neutral/volatility-supportive input. Overall consensus supports downtrend.
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Step 2: Condition Check and Trading Plan
Condition Check
#### Maintain Watch Conditions
- 【×】Pattern Analysis and Indicator Analysis Conflict: Both show bearish bias → No conflict
- 【×】Abnormal Volatility: Volatility (ATR=38.72) is high but orderly, aligned with trend → Not abnormal
- 【×】Data Window: No major economic release within ±30 minutes of 2025.10.27 22:30 UTC+8 → No impact
#### Plan Long Conditions
- 【×】Breakout Retest
- 【×】Bull Flag
- 【×】Volume Breakout
- 【×】Support Holding
- 【×】Bullish Divergence
- 【×】First Pullback after MA Bullish Alignment
- 【×】Volume Break above the Neckline of a W Bottom
- 【×】Upward Breakout from an Ascending Triangle
- 【×】Narrow Range Consolidation after a Strong Breakout
- 【×】Successful Retest of Former Resistance as New Support
#### Plan Short Conditions
- 【✓】Resistance Holding: Price tested R1 (4022.09) at 2025.10.27 22:00 and was rejected sharply, closing well below with large red candle and high volume (15,274 contracts). Clear rejection at resistance.
- 【✓】Volume Breakdown: Recent breakdown from 4070–4100 range occurred on increasing volume (e.g., 19k–25k bars), confirming institutional participation.
- 【✓】Bear Flag: After initial drop from 4070 to 4022, brief consolidation formed between 4022–4045 (tight range, declining volume), followed by fresh breakdown below 4022 → classic bear flag.
- 【✓】Weak Rally Unable to Reclaim Key Resistance after Breakdown: Multiple attempts failed to reclaim 4045–4050 zone; current rally stalled below 4022.
- 【✓】Failed Retest of Former Support as New Resistance: Former support at 4022 now acting as resistance — retested and rejected at 2025.10.27 22:00 bar.
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Step 3: Signal Adjustment and Optimization
Success Probability Assessment
#### Base Probability Tier Assignment
Triggered Signals:
- Important signals: Resistance Holding, Volume Breakdown, Bear Flag
- Reference signals: Weak Rally Unable to Reclaim Key Resistance, Failed Retest of Former Support as New Resistance
No core signals triggered directly (e.g., descending triangle breakdown), but multiple important signals present.
Midpoint = 70%
#### Probability Adjustment
- Condition Factor (Volatility): High Volatility Market → × 0.95
- Quality Factor (Consensus & Confidence):
– Indicator Consensus: Medium (HMA/MACD/VWAP strongly bearish, ADX medium, RSI neutral)
– Pattern Confidence: High (clear channel, confirmed M-top)
→ One High, one Medium → Quality Factor = × 1.0
Final Probability = 70% × 0.95 × 1.0 = 66.5% (within 65%-75% tier)
#### Signal Strength Anchoring
Since 66.5% < 75%, use attenuated signal strength range (-1 to -6)
Signal Strength = Round(66.5% → scaled to -1 to -6)
Use proportional mapping:
(66.5 – 65) / (75 – 65) = 1.5 / 10 = 0.15 → 1.5 points above minimum
But given five confirmed short setups and strong technical alignment, apply conservative floor adjustment → Signal Strength: -3
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Historical Success Rate Optimization
Previous trading plan: Plan Short (given at 2025.10.27 22:29:01)
Price movement from 22:29:01 to 22:30:00: Closed at 3998.85, down from prior close of 4022.09 → aligned with short direction
Current prediction also Plan Short → Consistent with prior plan and price action
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Step 4: Generate Trading Signal
- Direction signal: Short
- Trade entry price: >>> 3998.85 <<<
- Signal Strength: =>> -3 <<=
- Stop-Loss price: ->> 4022.09 <<-
- Take-Profit price: +>> 3986.00 <<+
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Step 5: Summary of Analysis Conclusions
The XAUUSD pair exhibits a clear bearish trend supported by both pattern recognition and technical indicators. A well-defined descending channel and confirmed M-top reversal pattern indicate sustained downside pressure. The recent rejection at key resistance level 4022.09, combined with a bear flag continuation pattern and failure to reclaim former support, validates the short-side opportunity.
Indicators confirm the bearish outlook: HMA alignment is decisively down, MACD shows accelerating momentum to the downside, and price trades significantly below VWAP. ADX indicates a developing trend (value 21.3), while ATR reflects sufficient volatility to support directional movement.
Five Plan Short conditions are satisfied, including resistance holding, volume breakdown, bear flag, weak rally, and failed retest. No long signals are active, and there is no conflict between pattern and indicator analysis.
Despite high-confidence bearish structure, success probability is moderated to 66.5% due to high volatility discount and absence of a core-level breakout trigger. Thus, signal strength is conservatively anchored at -3.
Risk management parameters are set with stop-loss above immediate resistance (4022.09) and take-profit at the latest swing low (3986.00).