Step 1: Market State Classification – AI Decision Tree Analysis
#### Primary Branch (ADX(14)):
- ADX(14) = 27.72121433
Since 23.99013447 ≤ ADX(14) < 31.99013447, we analyze the market as a Weak Trend Market.
#### Weak Trend Market Analysis (23.99013447 ≤ ADX < 31.99013447)
- 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
– Magnitude: 0.60%
- Volume expansion confirms the breakout:
– Volume Spike (>1.5x average): False
– Ratio: 1.02 (not significantly high)
- ADX begins to rise from low levels:
– ADX(14) = 27.72121433 (moderate and rising)
- Price maintains direction in the breakout’s favor for multiple bars:
– Price is below the 20-period low, but the trend is not strongly maintained over multiple bars.
Classification:
- 2 out of 4 conditions are met, which is not sufficient to classify as a strong trend initiation. However, the market shows some signs of a bearish trend initiation.
#### Probability-Based Fallback Analysis:
- Ranging Probability Factors:
– Low ADX value: +40%
– Narrow price range: +30%
– Consolidation patterns: +30%
– Total: 100%
- Initiation Probability Factors:
– Moderate ADX with upward slope: +30%
– Clear breakout signals: +40%
– Volume confirmation: +30%
– Total: 100%
- Mid-Trend Probability Factors:
– High ADX reading: +40%
– Trend consistency: +30%
– Channel adherence: +30%
– Total: 100%
- Exhaustion Probability Factors:
– ADX decline from peaks: +35%
– Multiple divergence signals: +40%
– Extended trend duration: +25%
– Total: 100%
Given the probabilities, the market is more likely to be in a Trend Initiation (Bearish) state.
Final Output:
- Market State: Trend Initiation (Bearish) | Confidence: 60%
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 = 0.00470204 (below dynamic threshold)
– Trend Initiation Bearish (Sell): Close 1.0 AND Breakout Confirmation
– Current Close = 5158.18000000
– KC Lower = 5133.29427983
– Breakout Filter = 60.94714286 (Baseline)
– VO = -1.23470400 (not > 1.0)
– Signal: No Sell Signal
- Volume – Price Breakout of Previous High / Low
– Trend Initiation Bearish (Sell): Close 0.1%
– Current Close = 5158.18000000
– Previous 20-period Low = 5143.88000000
– Increased Volume: False
– Breakout Magnitude = 0.60% (sufficient)
– Signal: No Sell Signal
- DMI Momentum Crossover Start
– Prerequisite: 23.99013447 ≤ ADX(14) < 31.99013447
– ADX(14) = 27.72121433 (valid)
– Trend Initiation Bearish (Sell): -DI(14) crosses above +DI(14) (Death Cross)
– +DI(14) = 12.85226743
– -DI(14) = 18.63542773
– Signal: Death Cross Confirmed (Sell Signal)
Actionable Signals:
- Sell Signal (DMI Momentum Crossover Start)
Step 3: AI Autonomous Analysis
#### Methodology:
- Pattern Recognition: Identify candlestick patterns and their implications.
- Multi-Timeframe Analysis: Use 5-minute, 15-minute, and 1-hour timeframes.
- Confluence of Divergences: Look for divergences in RSI, MACD, and other oscillators.
Analysis:
- Candlestick Patterns:
– Recent candles show a series of lower lows and lower highs, indicating a bearish trend.
– No significant bullish reversal patterns observed.
- Indicators:
– RSI(14): 44.20491929 (neutral, but trending down)
– MACD: DIF = -10.74685616, DEA = -11.30559615, Histogram = 0.55874000 (below signal line, bearish)
– DMI System: -DI(14) > +DI(14), confirming bearish momentum.
- Time and Volatility Considerations:
– London Open (15:00-16:00): Increased volatility, trend initiation probability higher.
– Current ATR: 20.31571429 (normal volatility)
High-Confidence Trading Signals:
- Sell Signal (confirmed by DMI Death Cross and bearish candlestick patterns)
Comparison:
- Both the specified model and autonomous analysis confirm a Sell Signal.
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 Score 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 = 27.72121433 (Normal Ranging)
– ATR = 20.31571429
– Stop-Loss = max(3.0 × ATR, 1.4 × distance to key level)
– Distance to key level (Pivot S1 = 5119.17666667) = 5158.18 – 5119.17666667 = 39.00333333
– Stop-Loss = max(3.0 × 20.31571429, 1.4 × 39.00333333) = max(60.94714287, 54.60466666) = 60.94714287
– Adjusted Stop-Loss (London Open, ×0.7) = 60.94714287 × 0.7 = 42.66300001
– Final Stop-Loss = 5158.18 – 42.66300001 = 5115.517
- Take-Profit Strategy:
– Risk-Reward Ratio: Minimum 1.3:1, Ideal 2.0:1
– Take-Profit = 5158.18 – (42.66300001 × 1.3) = 5158.18 – 55.46190001 = 5102.7181
Final Signal:
- Direction signal: Short
- Trade entry price: >>> 5158.18 <<<
- Signal Strength: =>> -10 <<=
- Stop-Loss price: ->> 5115.517 <<-
- Take-Profit price: +>> 5102.7181 <<+
Step 5: Summarize analysis conclusions
- Market State: The market is classified as Trend Initiation (Bearish) with a confidence of 60%.
- Trading Signal: A Sell Signal is generated based on both the specified model and autonomous analysis.
- Trade Entry: The trade entry price is 5158.18, with a stop-loss at 5115.517 and a take-profit at 5102.7181.
- Risk Management: The risk-reward ratio is set to 1.3:1, and the stop-loss is adjusted for the London Open session.
This trading plan is designed to capitalize on the bearish trend initiation while managing risk effectively.