Step 1: Market State Classification – AI Decision Tree Analysis
#### Primary Branch (ADX(14)):
- ADX(14) = 33.16866188
Since ( 20.95592176 leq text{ADX(14)} < 28.95592176 ), we analyze this as a Weak Trend Market.
#### Weak Trend Market Analysis (20.95592176 ≤ ADX < 28.95592176)
- Option B: Trend Initiation State (Bullish/Bearish)
Check Conditions:
- Clear breakout above (bullish) or below (bearish) a key resistance or support level:
– Below 20-period Low: True
– Above 20-period High: False
– Magnitude: 1.00%
- Volume expansion confirms the breakout:
– Spike (>1.5x average): False
– Ratio: 0.98
- ADX begins to rise from low levels:
– ADX(14) = 33.16866188 (This is already at a moderate level, not rising from a low level)
- Price maintains direction in the breakout’s favor for multiple bars:
– The price has been below the 20-period low and has maintained a bearish trend.
Classification:
- Conditions met: 2 out of 4
- Since only 2 conditions are met, we do not classify this as a strong trend initiation. We will use the probability-based fallback analysis.
#### Probability-Based Fallback Analysis:
- Ranging Probability Factors:
– Low ADX value: +40% (Not applicable, ADX is 33.16866188)
– Narrow price range: +30% (BB Bandwidth = 0.00555207, which is narrow)
– Consolidation patterns: +30% (RSI oscillates around 50, indicating consolidation)
- Initiation Probability Factors:
– Moderate ADX with upward slope: +30% (ADX is moderate but not rising from a low level)
– Clear breakout signals: +40% (Below 20-period low, magnitude 1.00%)
– Volume confirmation: +30% (No significant volume spike, ratio 0.98)
- Mid-Trend Probability Factors:
– High ADX reading: +40% (ADX is 33.16866188, which is moderate)
– Trend consistency: +30% (Price maintains direction in the breakout’s favor)
– Channel adherence: +30% (Price is within Keltner Channel, but not strongly adhering)
- Exhaustion Probability Factors:
– ADX decline from peaks: +35% (Not applicable, ADX is not declining)
– Multiple divergence signals: +40% (No clear divergence signals)
– Extended trend duration: +25% (Trend is not extended)
Probability Calculation:
- Ranging/Consolidation: 60%
- Trend Initiation: 100%
- Mid-Trend: 100%
- Trend Exhaustion: 0%
Final Output:
- Market State: Trend Initiation (Bearish) | Confidence: 100%
Step 2: Specified Model Quantitative Analysis
#### Models for Option B: Trend Initiation State (Bullish/Bearish)
- Volatility Squeeze Breakout:
– Prerequisite: BB Width < Dynamic Bandwidth Threshold
– BB Bandwidth = 0.00555207 (Dynamic Bandwidth = 0.02080687)
– Condition Met: True
– Trend Initiation Bearish (Sell): Close 1.0 AND Breakout Confirmation
– Close = 5148.64000000
– KC Lower Band = 5135.61550429
– Breakout Filter = 62.73428571
– VO = -13.54316746 (Not > 1.0)
– Condition Met: False
- Volume – Price Breakout of Previous High / Low:
– Trend Initiation Bearish (Sell): Close 0.1%
– Close = 5148.64000000
– Previous 20-period Low = 5148.64000000 (Assuming it is the current close)
– Increased Volume: False (No significant volume spike, ratio 0.98)
– Breakout Magnitude = 1.00%
– Condition Met: False
- DMI Momentum Crossover Start:
– Prerequisite: 20.95592176 ≤ ADX(14) < 28.95592176
– Condition Met: True
– Trend Initiation Bearish (Sell): -DI(14) crosses above + DI(14)(Death Cross)
– +DI(14) = 9.65833835
– -DI(14) = 28.62747773
– Condition Met: True (Death Cross confirmed)
Actionable Signals:
- Sell Signal: DMI Momentum Crossover Start
Step 3: AI Autonomous Analysis
#### Methodology:
- Pattern Recognition: Analyze candlestick patterns and technical indicators.
- Multi-Timeframe Analysis: Consider the 5-minute timeframe and recent patterns.
- Confluence of Divergences: Look for divergences in RSI, MACD, and other oscillators.
Analysis:
- Candlestick Patterns:
– Bearish Engulfing Pattern: Not present
– Bearish Pin Bar: Not present
– Bearish Harami: Not present
- Technical Indicators:
– RSI(14) = 39.40302122 (Oversold threshold: 30)
– MACD Histogram = 0.59840676 (Positive, but small)
– Stochastic %K = 43.07370622, %D = 50.82009642 (Neutral)
– CCI(14) = -85.16145732 (Oversold)
- Trend Analysis:
– HMA (Dynamic Period) = 5161.28762194 (Slope down)
– KAMA(10,2,30) = 5161.27228862 (Slope down)
– Price below HMA and KAMA, indicating a bearish trend.
- Volume Analysis:
– OBV = 3655875.00000000 (No significant increase)
– MFI(14) = 37.94844889 (Neutral)
Actionable Signals:
- Sell Signal: Based on the confluence of bearish indicators (DMI Death Cross, RSI near oversold, CCI oversold, and price below moving averages).
Step 4: Generate 1 trading signal based on the confirmed trading plan
#### Weighted Decision Matrix:
- Specified Model (Step 2): Sell Signal = -1
- Autonomous AI Analysis (Step 3): Sell Signal = -1
Final Decision Calculation:
- Final Score = (Step2_Score × 0.6) + (Step3_Score × 0.4)
- Final Score = (-1 × 0.6) + (-1 × 0.4) = -1.0
Threshold-Based Action:
- Plan Short: Final Score ≤ -0.4
Stop-Loss Strategy:
- ADX = 33.16866188 (Trend Formation)
- ATR = 20.91142857
- Time Factor (London Open 15:00-16:00): 0.7
- Volatility Factor (Normal Volatility ATR 1.5-2.8): 1.0
- Base Multiplier = max(2.8 × ATR, 1.3 × distance to key level)
- Distance to key level (Pivot Support S1 = 5118.70333333): 5148.64 – 5118.70333333 = 29.93666667
- Base Multiplier = max(2.8 × 20.91142857, 1.3 × 29.93666667) = max(58.55200000, 38.91766667) = 58.55200000
- Adjusted Stop-Loss = 5148.64 – 58.55200000 × 0.7 × 1.0 = 5148.64 – 40.9864 = 5107.6536
Take-Profit Strategy:
- Risk-Reward Ratio by ADX (Trend Formation): Minimum 1.8:1, Ideal 2.5:1
- Swing Point (Recent Low): 5118.70333333
- Buffer: 0.5 × ATR = 0.5 × 20.91142857 = 10.45571429
- Take-Profit = 5118.70333333 – 10.45571429 = 5108.24761904
- Adjusted Take-Profit (Minimum 1.8:1): 5148.64 – 40.9864 × 1.8 = 5148.64 – 73.77552 = 5074.86448
Final Signal:
- Direction signal: Short
- Trade entry price: >>> 5148.64 <<<
- Signal Strength: =>> -10 <<=
- Stop-Loss price: ->> 5107.65 <<-
- Take-Profit price: +>> 5074.86 <<+
Step 5: Summarize analysis conclusions
- Market State: Trend Initiation (Bearish) | Confidence: 100%
- Actionable Signals:
– Sell Signal: DMI Momentum Crossover Start
– Sell Signal: Confluence of bearish indicators (DMI Death Cross, RSI near oversold, CCI oversold, and price below moving averages)
- Trading Plan:
– Direction signal: Short
– Trade entry price: 5148.64
– Signal Strength: -10
– Stop-Loss price: 5107.65
– Take-Profit price: 5074.86
The market is in a weak bearish trend, and the confluence of bearish indicators supports a short position. The stop-loss and take-profit levels are set based on the ATR and risk-reward ratio.