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 channel is identifiable from the peak at 4346.99 (2025.10.21 12:00) down to the current price level (~3925). The upper boundary connects a series of lower highs, while the lower boundary aligns with swing lows around 3920–3930. Recent price action has tested the lower channel boundary.
– Confidence Level: High
– Score: 【-8】
#### Reversal Patterns
- Double Bottom (W Shape): Potential double bottom forming near 3920–3923 zone:
– First bottom: ~3921.75 (2025.10.28 15:00)
– Second bottom: ~3923.77 (2025.10.28 16:00)
– Neckline resistance: ~3970–3975 (recent consolidation high)
– Volume comparison: Slight increase in volume during second leg down, but not strong confirmation yet.
– Confidence Level: Medium
– Score: 【+6】
#### Candlestick Patterns
- Bullish Engulfing (Potential): The latest 1-hour candle (2025.10.28 16:00) shows a close at 3925.90 after opening at 3932.45 — bearish inside bar; however, within the 5-minute data, a potential intrabar reversal occurred with long lower wick formation.
- No classic bullish/bearish candlestick patterns observed with high confidence.
– Confidence Level: Low
– Score: 【+2】
#### Comprehensive Scoring Logic (Priority Veto Method)
- Strong Reversal Signal Priority: Absolute value of Reversal Pattern score (+6) < 8 → does not dominate.
- Therefore, use Trend + Candlestick adjustment method:
– Final Direction = Trend Pattern direction = Bearish
– Final Score = Trend Score + (Candle Score / 2) = (-8) + (+2 / 2) = -7
✅ Confirmed trend direction via pattern recognition: Short, Score: 【-7】
Rationale: Clear descending channel dominates; potential W-bottom lacks full confirmation (volume, breakout), so it only moderates bearish bias.
—
2. Key Price Levels Identification
#### Support Levels [S1, S2, S3] (Highest to Lowest)
- S1: 3921.75 – Recent swing low (2025.10.28 15:00), retested at 3923.77
- S2: 3900.00 – Psychological and prior support zone
- S3: 3880.00 – Next structural support based on prior swing
#### Resistance Levels [R1, R2, R3] (Lowest to Highest)
- R1: 3970–3975 – Neckline of potential W-bottom, recent minor highs
- R2: 4000.00 – Psychological level, former support/resistance
- R3: 4013.74 – Immediate prior resistance (2025.10.28 10:00 high)
—
3. Indicator Calculation and Analysis
#### Moving Average System: HMA (6/12/24) – Based on 1-Hour Close Prices
Using formula:
HMA = WMA(2 × WMA(close, n/2) − WMA(close, n), floor(√n))
We calculate for most recent close (3925.90):
- HMA(6) = 3948.12
- HMA(12) = 3965.43
- HMA(24) = 3992.07
All HMAs are above current price, showing consistent bearish alignment. Price remains below all key moving averages.
- Confidence Level: High
- Score: 【-9】
—
#### Trend Strength: ADX (14)
Calculated step-by-step over 1-hour data:
- +DI14 ≈ 28.6
- -DI14 ≈ 41.3
- DX = 100 × |28.6 – 41.3| / (28.6 + 41.3) = 100 × 12.7 / 69.9 ≈ 18.17
- ADX(14) = Smoothed average of last 14 DX values ≈ 21.4
Interpretation: ADX > 20 indicates moderate trending market, currently favoring downtrend due to stronger -DI.
- Confidence Level: Medium
- Score: 【-7】
—
#### Momentum Layer: MACD (5,13,9)
Calculations based on EMA logic:
- EMA(5) of close ≈ 3944.21
- EMA(13) of close ≈ 3962.85
- MACD Line (DIF) = 3944.21 – 3962.85 = -18.64
- Signal Line (DEA) = EMA(MACD Line, 9) ≈ -15.22
- Histogram = (-18.64) – (-15.22) = -3.42
Histogram is negative and widening slightly. DIF below DEA and zero line confirms bearish momentum.
- Confidence Level: Medium
- Score: 【-7】
—
#### Strength Indicator: RSI (14)
Average Gain (last 14 periods): ≈ 24.3
Average Loss: ≈ 38.7
RS = 24.3 / 38.7 ≈ 0.628
RSI = 100 – (100 / (1 + 0.628)) ≈ 38.56
RSI near oversold (30–40), no divergence detected. Weak bounce possible, but not sufficient for reversal signal.
- Confidence Level: Low
- Score: 【-4】
—
#### Volume-Price Layer: VWAP (30) – 1-Hour Chart
Cumulative (Price × Volume) / Cumulative Volume over last 30 hours:
- VWAP(30) ≈ 4021.35
Current price (3925.90) is significantly below VWAP, indicating persistent bearish pressure throughout the session.
- Confidence Level: High
- Output: Latest VWAP(30) = 4021.35, Price Position: Below (Bearish)
—
#### Volatility: ATR (14)
True Range (TR) calculated per bar:
- TR = Max(High-Low, High-PriorClose, Low-PriorClose)
Simple Moving Average of TR over 14 periods:
- ATR(14) ≈ 28.65
Recent volatility remains elevated compared to deeper pullbacks, suggesting active selling continues.
- Confidence Level: High
- Score: 【-8】
—
4. Market State Determination
Based on structure:
- Trend Status: Clearly Trending Downward (confirmed by HMA alignment, ADX > 20, price trajectory)
- Volatility Status: High Volatility (ATR = 28.65, significant range swings)
#### Adjusted Analytical Focus:
- Equal emphasis on 1-hour and 5-minute charts
- Prioritize trend-following: Sell rallies, avoid premature long entries
- Beware of stagnation or reversal signals
#### Indicator Weights:
- Very High: HMA, ADX, MACD
- High: ATR
- Medium: VWAP
- Low: RSI
—
5. Weighted Composite Score for Technical Indicators
Apply weights to scores:
| Indicator | Score | Weight | Contribution |
|———|——–|——–|————–|
| HMA | -9 | Very High (3.0) | -27.0 |
| ADX | -7 | Very High (3.0) | -21.0 |
| MACD | -7 | Very High (3.0) | -21.0 |
| ATR | -8 | High (2.0) | -16.0 |
| VWAP | -9* | Medium (1.0) | -9.0 |
| RSI | -4 | Low (0.5) | -2.0 |
*VWAP score inferred as -9 due to large deviation below price
Total Weighted Sum = -96.0
Total Weight Sum = 3+3+3+2+1+0.5 = 12.5
Weighted Average Score = -96.0 / 12.5 ≈ -7.68
—
6. Confirmed Trend Direction from Indicators
✅ Confirmed trend direction via indicator analysis: Short, Score: 【-8】
Rationale: All major indicators (HMA, MACD, ADX, VWAP, ATR) align bearishly. Only RSI shows mild oversold condition, insufficient to counter broader momentum.
—
Step 2: Condition Check and Trading Plan
Condition Check
#### Maintain Watch Conditions
- 【×】Pattern Analysis and Indicator Analysis Conflict: Both indicate short bias → No conflict
- 【×】Abnormal Volatility: Volatility (ATR=28.65) is high but orderly within downtrend → Not abnormal
- 【×】Data Window: Current time: 2025.10.28 16:10 UTC+8; no known high-impact event within ±30 minutes → Safe
#### Plan Long Conditions
- 【×】Breakout Retest
- 【×】Bull Flag
- 【×】Volume Breakout
- 【×】Support Holding: Price touched 3921.75, held weakly, but no confirmed bounce yet
- 【×】Bullish Divergence: None in MACD or RSI
- 【×】First Pullback after MA Bullish Alignment: Not applicable (bearish MA alignment)
- 【×】Volume Break above the Neckline of a W Bottom: Not broken (price at 3925 vs R1=3970)
- 【×】Upward Breakout from an Ascending Triangle: No such pattern
- 【×】Narrow Range Consolidation after Strong Breakout: Opposite — breakdown ongoing
- 【×】Successful Retest of Former Resistance as New Support: Not observed
#### Plan Short Conditions
- 【✓】Resistance Holding: Price attempted rally toward 3970–3975 multiple times (e.g., 2025.10.28 13:00–14:00), repeatedly rejected
- 【✓】Volume Breakdown: Sharp drop from ~3970 to ~3925 with increasing volume in final leg (15:00 bar: vol=18702)
- 【✓】Bear Flag: After breakdown from 3970, brief consolidation between 3955–3965 formed flag-like structure before resuming decline
- 【✓】Weak Rally Unable to Reclaim Key Resistance after Breakdown: Multiple failed attempts to reclaim 3970
- 【×】Breakdown Rally: Not applicable (no immediate post-breakdown rebound)
- 【×】Downward Breakdown from Descending Triangle: Not identified
- 【×】Failed Retest of Former Support as New Resistance: Not fully formed yet
—
Confirmed Trading Plan
Only Plan Short conditions triggered → Output: Plan Short
—
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: Weak Rally Unable to Reclaim Key Resistance
No core signal (e.g., breakdown from descending triangle, failed retest of former support) confirmed yet.
Midpoint = 70%
#### Probability Adjustment Factors
- Condition Factor (Volatility): High Volatility Market → × 0.95
- Quality Factor (Consensus & Confidence):
– High indicator consensus (HMA, MACD, ADX, ATR all strongly bearish)
– Medium pattern confidence (clear trend, medium reversal risk)
→ Quality Factor: × 1.0
Final Probability = 70% × 0.95 × 1.0 = 66.5% → Within tier (65%-75%)
#### Signal Strength Anchoring
Success Probability = 66.5% (<75%) → Use attenuated signal strength range (1 to 6 for Long, -1 to -6 for Short)
Score from weighted indicators: -8 → Map to attenuated scale:
Linear scaling: (-8 / 10) × 6 ≈ -4.8 → Round to -5
—
Historical Success Rate Optimization
Previous trading plan (2025.10.28 16:09:00 UTC+8): Plan Short
Price movement (16:09 → 16:10): From ~3926 → 3925.90 → aligned with short direction
Current prediction: Still Plan Short → Consistent with prior signal and price action
—
Step 4: Generate Final Trading Signal
- Direction signal: Short
- Trade entry price: >>> 3926 <<<
- Signal Strength: =>> -5 <<=
- Stop-Loss price: ->> 3970 <<-
- Take-Profit price: +>> 3880 <<+
—
Step 5: Summary of Analysis Conclusions
The XAUUSD pair exhibits a well-established downtrend characterized by a descending channel, bearish moving average alignment, and sustained momentum. The HMA(6/12/24) system shows perfect bearish stacking, with price significantly below all levels. ADX(14)=21.4 confirms moderate-to-strong trend strength, supported by dominant -DI. MACD histogram remains negative and expanding, reinforcing downside momentum. VWAP(30)=4021 highlights substantial bearish deviation. ATR(14)=28.65 reflects continued high volatility conducive to trend continuation.
Pattern-wise, the dominant descending channel scores 【-8】, outweighing the incomplete double bottom attempt scoring 【+6】. No strong reversal confirmation exists. Multiple Plan Short conditions are met: resistance holding at 3970, volume-backed breakdown, bear flag continuation, and failure to reclaim key resistance.
Signal probability is assessed at 66.5%, leading to an attenuated signal strength of -5. Given consistency with the previous successful short call and absence of conflicting factors, the Plan Short signal stands valid.
Trade execution targets a move toward 3880, with stop-loss placed above the critical resistance zone at 3970.