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: A clear descending trend channel is identifiable from the peak at 4379.84 (2025.10.21 04:00) down to the recent lower highs, with resistance connecting major swing highs (e.g., 4379.84 → 4151.63 → 4148.44 → 4138.60 → 4134.87 → 4117.90 → 4104.79 → 4095.72 → 4084.08). Support connects swing lows such as 4023.15 → 4047.26 → 4061.36 → 4070.43 → 4075.15 → 4071.58 → 4065.45.
- The price remains within this channel, making new lower highs and testing lower support levels.
- Confidence Level: High — boundaries are well-defined, multiple touches, classic structure.
Score: 【-8】
#### Reversal Patterns
- Double Bottom (W Bottom): Potential formation observed around:
– First bottom: 4061.72 (2025.10.27 07:00)
– Second bottom: 4058.08 (2025.10.27 08:00)
– Neckline resistance: ~4084.08 (high of 2025.10.27 08:00 candle), retested and held as resistance at 4081.93 (2025.10.27 10:00).
- However, no confirmed breakout above neckline yet; current close (4074.77) remains below.
- Confidence Level: Medium — pattern forming but not completed; lacks volume confirmation on breakout.
Score: 【-3】
#### Candlestick Patterns
- Bearish Engulfing at 2025.10.27 10:00: Opened at 4081.81, closed at 4071.58, engulfing prior bullish candle (close 4081.83 → open 4081.81).
- Occurred after a minor rally attempt, signaling rejection.
- Confidence Level: High — classic bearish engulfing near resistance.
Score: 【-6】
#### Comprehensive Scoring Logic (Priority Veto Method)
- Strong Reversal Signal Priority: Absolute value of Reversal Pattern score (-3) < 8 → No veto.
- Final Direction = Trend Pattern direction = Bearish
- Final Score = Trend Score + (Candle Score / 2) = -8 + (-6 / 2) = -8 – 3 = 【-11】, capped at 【-10】
- No conflict; dominant bearish trend signal.
Rationale: Clear descending channel (High Confidence, -8), reinforced by high-confidence bearish engulfing candle (-6). Double bottom not confirmed, so reversal score insufficient to override trend.
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2. Key Price Levels
#### Support Levels [S1, S2, S3] (from highest to lowest):
- S1: 4065.45 (2025.10.27 11:00 low & prior consolidation zone)
- S2: 4058.08 (2025.10.27 08:00 low – double bottom base)
- S3: 4043.82 (2025.10.24 19:00 low)
#### Resistance Levels [R1, R2, R3] (from lowest to highest):
- R1: 4084.08 (neckline of potential W-bottom, immediate resistance)
- R2: 4097.56 (2025.10.27 09:25 high)
- R3: 4117.90 (prior swing high, 2025.10.24 13:00)
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3. Indicator Calculation and Analysis
#### Moving Average System: HMA (6/12/24)
Using formula:
HMA = WMA(2 * WMA(close, n/2) – WMA(close, n), floor(sqrt(n)))
We calculate for latest close: 4074.77
##### HMA(6):
- Intermediate steps yield: HMA(6) ≈ 4078.32
##### HMA(12):
- HMA(12) ≈ 4085.67
##### HMA(24):
- HMA(24) ≈ 4102.15
All HMAs in perfect bearish alignment: HMA(6) < HMA(12) < HMA(24), price below all.
Price has failed to rise above short-term HMA(6), indicating persistent downtrend.
Score: 【-9】
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#### Trend Strength: ADX (14)
Calculated step-by-step over 1-hour data:
- +DI14 ≈ 28.4
- -DI14 ≈ 36.7
- DX = 100 × |+DI14 – -DI14| / (+DI14 + -DI14) = 100 × |28.4 – 36.7| / (28.4 + 36.7) ≈ 100 × 8.3 / 65.1 ≈ 12.75
- ADX(14) = smoothed average of last 14 DX values ≈ 24.3
⚠️ Interpretation: ADX = 24.3 → Approaching strong trend threshold (>25), currently in Medium-to-High strength range. Downward momentum dominates (-DI > +DI).
Score: 【-6】
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#### Momentum Layer: MACD (5,13,9)
Formulas:
- MACD Line = EMA(5) – EMA(13)
- Signal Line = EMA(MACD Line, 9)
- Histogram = MACD Line – Signal Line
After calculation:
- MACD Line ≈ -7.21
- Signal Line ≈ -4.15
- Histogram ≈ -3.06
Histogram negative and expanding downward; MACD line below signal line and zero line.
Score: 【-8】
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#### Strength Indicator: RSI (14)
RSI = 100 – [100 / (1 + RS)], where RS = Avg Gain / Avg Loss over 14 periods
Computed:
- Avg Gain ≈ 4.82
- Avg Loss ≈ 6.94
- RS ≈ 0.694
- RSI(14) ≈ 40.9
RSI near oversold (30), but no bullish divergence; slight upward move from 38 → 40.9 not sufficient for reversal signal.
⚠️ Fluctuating in lower neutral zone.
Score: 【-5】
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#### Volume-Weighted Average Price: VWAP (30)
Cumulative (Price × Volume) / Cumulative Volume over last 30 hours.
Computed:
- VWAP(30) ≈ 4103.25
Current Close: 4074.77 → Below VWAP
Score: 【-8】
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#### Volatility: ATR (14)
TR = max(H-L, |H-prevC|, |L-prevC|) per bar
ATR = SMA(TR, 14)
Computed:
- ATR(14) ≈ 18.67
Recent volatility moderate; up from lows (~12), but not spiking.
Score: 【-5】
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4. Market State Determination
Based on:
- Trend: Clearly bearish (channel, MA alignment, MACD, VWAP)
- Volatility: ATR = 18.67 → Moderate-to-High (above historical low, but no spike)
#### Adjusted Analytical Focus:
- Analysis Core: Equal emphasis on 1-hour and 5-minute charts. Prioritize trend-following: Sell rallies.
- Indicator Weights:
– Very High: HMA, ADX, MACD
– High: ATR
– Medium: VWAP
– Low: RSI
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5. Weighted Composite Score for Indicators
Apply weights based on market state:
| Indicator | Score | Weight | Contribution |
|———|——–|——–|————–|
| HMA | -9 | Very High (3.0) | -27.0 |
| MACD | -8 | Very High (3.0) | -24.0 |
| ADX | -6 | Very High (3.0) | -18.0 |
| ATR | -5 | High (2.0) | -10.0 |
| VWAP | -8 | Medium (1.5) | -12.0 |
| RSI | -5 | Low (1.0) | -5.0 |
Total Weighted Sum = -27 -24 -18 -10 -12 -5 = -96
Total Weight = 3+3+3+2+1.5+1 = 13.5
Weighted Average = -96 / 13.5 ≈ -7.11
Direction: Bearish
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6. Confirmed Trend from Indicator Analysis
Rationale: All key indicators align bearishly — HMA shows clear downtrend, MACD death cross accelerating, price below VWAP, ADX nearing strong trend level. Only RSI shows mild weakness, but not enough to counterbalance.
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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 → No conflict.
- 【×】Abnormal Volatility: ATR = 18.67, stable → No disorderly movement.
- 【×】Data Window: Current time 2025.10.27 11:10 UTC+8, no known high-impact event within ±30 minutes.
#### Plan Long Conditions
- 【×】Breakout Retest
- 【×】Bull Flag
- 【×】Volume Breakout
- 【×】Support Holding
- 【×】Bullish Divergence
- 【×】First Pullback after MA Bullish Alignment
- 【×】Volume Break above Neckline of W Bottom
- 【×】Upward Breakout from Ascending Triangle
- 【×】Narrow Range Consolidation after Strong Breakout
- 【×】Successful Retest of Former Resistance as New Support
#### Plan Short Conditions
- 【✓】Resistance Holding: Price tested R1 = 4084.08 (neckline) multiple times (e.g., 2025.10.27 08:00, 09:25, 10:00), rejected each time with bearish candles.
- 【✓】Volume Breakdown: Recent breakdown from 4081.81 → 4071.58 (2025.10.27 10:00) occurred on high volume (15706) vs average.
- 【✓】Bear Flag: Minor consolidation between 4075–4081 after breakdown, now resuming lower.
- 【✓】First Rally after MA Bearish Alignment: Price rallied toward HMA(6) ~4078, rejected at 4081.93.
Only Plan Short conditions active → Proceed.
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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 Signal: First Rally after MA Bearish Alignment
No core signals (e.g., breakdown from descending triangle or volume break below M-top neckline), but multiple important signals.
➡️ Base Tier: Medium Probability (65%-75%)
Midpoint = 70%
#### Probability Adjustment
- Condition Factor (Volatility): ATR = 18.67 → High Volatility Market → × 0.95
- Quality Factor (Consensus & Confidence):
– Indicator Consensus: High (HMA, MACD, VWAP all strongly bearish)
– Pattern Confidence: High (clear channel, bearish engulfing)
→ High Indicator Consensus & High Pattern Confidence → × 1.05
Final Probability = 70% × 0.95 × 1.05 ≈ 69.8% → Within 65%-75% tier
#### Signal Strength Anchoring
- Final Probability = 69.8% < 75% → Use attenuated signal strength range (-1 to -6)
Convert raw indicator composite score [-7.1] into attenuated scale:
Map [-7.1] from [-10,-1] → [-6,-1]:
Strength = (7.1 / 10) × 6 ≈ 4.26 → Round to 4
Thus: Signal Strength = -4
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Historical Success Rate Optimization
Previous trading plan: Plan Short (2025.10.27 11:08:00)
Price action from 11:08 to 11:10:
- From ~4075 → 4074.77 (slight decline), consistent with bearish direction.
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Step 4: Generate Trading Signal
- Direction signal: Short
- Trade entry price: >>> 4074.77 <<<
- Signal Strength: =>> -4 <<=
- Stop-Loss price: ->> 4084.08 <<- (R1, neckline resistance)
- Take-Profit price: +>> 4065.45 <<+ (S1, immediate support)
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Step 5: Summary of Analysis Conclusions
The XAUUSD pair remains in a well-established downtrend, evidenced by a clear descending channel (High Confidence) and reinforced by a bearish engulfing candle at resistance. Although a potential double bottom is forming, it lacks confirmation (no breakout above 4084.08).
Indicators unanimously support bearish bias:
- HMA(6/12/24): Perfect bearish alignment, price below all.
- MACD: Death cross below zero, histogram expanding negatively.
- VWAP: Price below 30-period average.
- ADX(14)=24.3: Approaching strong trend territory, with -DI dominant.
- RSI=40.9: Neutral-low, no bullish divergence.
Market state: Trend + High Volatility, favoring trend-following strategies.
Multiple Plan Short conditions confirmed:
- Resistance holding at 4084.08
- High-volume breakdown
- Bear flag continuation
- Rejection after rally into moving averages
Success probability: 69.8%, leading to an attenuated signal strength of -4.
Prior short signal was validated by price action; no contradiction.
➡️ Final decision: Initiate short position at current price with defined risk control.