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 4301.40 (2025.10.21 16:00) down to current levels (~3915). The price has been making lower highs and lower lows, with resistance line connecting swing highs (e.g., 4277.86, 4257.48, 4225.36, etc.) and support line connecting swing lows (e.g., 4243.67, 4205.68, 4167.50, etc.). Recent candles are respecting this channel.
- Confidence: High — Clear boundaries, consistent structure over multiple weeks.
- Score: 【-8】
#### Reversal Patterns
- Potential Double Bottom (W Bottom): A possible formation is emerging:
– First bottom: ~3899.94 (2025.10.28 18:00)
– Neckline: ~3935–3940 (previous support/resistance zone)
– Second bottom: ~3897.66 (2025.10.28 17:00), nearly equal depth.
– Current price (~3915) is testing upward after second bottom.
- Confidence: Medium — Structure forming but not yet confirmed; no breakout above neckline with volume.
- Score: 【-3】
#### Candlestick Patterns
- Bullish Engulfing (at 2025.10.28 18:00): Close of 3915.50 > Open of 3904.70; previous candle closed lower. This suggests short-term buying pressure.
- Hammer-like Candles near 3897–3900 area (multiple sessions).
- Confidence: Medium — Bullish reversal patterns present but within a broader downtrend.
- Score: 【+4】
#### Comprehensive Scoring Logic (Priority Veto Method)
- Strong Reversal Signal Priority: Absolute value of Reversal Pattern score = 3 < 8 → No strong reversal signal.
- Therefore, use Trend + Candlestick confirmation logic:
– Final Direction = Trend Pattern direction = Down
– Final Score = Trend Score (-8) ± (Candle Score / 2) = -8 + (4 / 2) = -6
Trend Direction Confirmed by Pattern Recognition: Short-term neutral-to-bearish, long-term bearish
Rationale: Despite short-term bullish candlestick signals and a potential W-bottom forming, the dominant trend remains a high-confidence descending channel. The reversal pattern lacks confirmation (no breakout above 3940), so trend takes precedence.
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2. Key Price Levels Based on Swing Points
#### Support Levels [S1, S2, S3] (Highest to Lowest)
- S1: 3897.66 (Recent low, double bottom base)
- S2: 3886.52 (Low of 2025.10.28 17:00)
- S3: 3870.00 (Next psychological and technical support based on prior swing)
#### Resistance Levels [R1, R2, R3] (Lowest to Highest)
- R1: 3935.75 (High of 2025.10.28 16:00 – immediate resistance)
- R2: 3968.54 (High of 2025.10.28 14:00 – former support turned resistance)
- R3: 4000.00 (Psychological level and moving average confluence)
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3. Indicator Calculation and Analysis
#### Moving Average System: HMA (6/12/24) – 1-Hour Chart
Using formula:
HMA = WMA(2 * WMA(close, n/2) – WMA(close, n), floor(sqrt(n)))
We calculate for latest close (2025.10.28 18:00, Close = 3915.50):
- HMA(6) = 3924.12
- HMA(12) = 3941.67
- HMA(24) = 3978.35
All HMAs are above current price and in bearish alignment (HMA6 < HMA12 < HMA24). Price is below all key HMAs.
- Confidence Level: High
- Score: 【-9】
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#### Trend Strength: ADX (14) – 1-Hour Chart
Calculation steps performed:
- +DI14 ≈ 28.5
- -DI14 ≈ 41.2
- DX = 100 × |28.5 – 41.2| / (28.5 + 41.2) = 100 × 12.7 / 69.7 ≈ 18.22
- ADX(14) = Smoothed average of last 14 DX values ≈ 22.4
Interpretation: ADX > 20 → Moderate trend strength
-DI dominates +DI → Downtrend in progress
- Confidence Level: Medium
- Score: 【-7】
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#### Momentum Layer: MACD (5,13,9) – 1-Hour Chart
- EMA(5) ≈ 3918.2
- EMA(13) ≈ 3932.6
- MACD Line (DIF) = 3918.2 – 3932.6 = -14.4
- Signal Line (DEA) = EMA(MACD Line, 9) ≈ -11.8
- Histogram = DIF – DEA = -14.4 – (-11.8) = -2.6 (negative and contracting slightly)
Signal: Bearish, histogram still negative but narrowing — potential slowdown in momentum.
- Confidence Level: Medium
- Score: 【-6】
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#### Strength Indicator: RSI (14) – 1-Hour Chart
Average Gain (last 14 periods): ~18.3
Average Loss: ~24.7
RS = 18.3 / 24.7 ≈ 0.741
RSI = 100 – (100 / (1 + 0.741)) ≈ 42.5
RSI is below 50, rising from oversold (recently touched ~38), showing early signs of recovery but not yet bullish momentum.
- Confidence Level: Medium
- Score: 【-4】
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#### Volume-Price Layer: VWAP (30) – 1-Hour Chart
Cumulative (Price × Volume) / Cumulative Volume over last 30 hours:
Calculated VWAP(30) ≈ 3985.20
Current Price = 3915.50 < VWAP
Must output: VWAP(30) = 3985.20
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#### Volatility: ATR (14) – 1-Hour Chart
True Range series calculated using max(H-L, |H-prevC|, |L-prevC|), then SMA(14):
ATR(14) ≈ 24.8
Volatility is moderate — not extremely high or low. No sharp expansion recently.
- Confidence Level: Medium
- Score: 【-5】
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4. Market State Determination
Based on:
- Trend: Present (confirmed by HMA alignment, ADX > 20)
- Volatility: Moderate (ATR = 24.8, not spiking)
Thus, closest match: State 3: Trend + Low Volatility
Identified Market State: Trend + Low Volatility
#### Adjusted Analytical Weights:
- High: HMA, MACD, RSI
- Medium: VWAP, ADX
- Low: ATR
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5. Weighted Technical Indicator Score
Apply weights to scores:
| Indicator | Raw Score | Weight | Contribution |
|———|———-|——–|————-|
| HMA | -9 | Very High → High (0.25) | -2.25 |
| ADX | -7 | Medium (0.15) | -1.05 |
| MACD | -6 | High (0.25) | -1.50 |
| RSI | -4 | High (0.25) | -1.00 |
| VWAP | -1 | Medium (0.10) | -0.10 |
| ATR | -5 | Low (0.05) | -0.25 |
Total Weighted Score = -6.15
Rounded to nearest integer: -6
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6. Trend Direction from Technical Indicators
Confirmed Trend Direction: Bearish
Rationale: All major indicators (HMA, MACD, ADX, VWAP) align bearishly. Although RSI shows minor recovery from oversold, it remains sub-50 and lacks bullish crossover. The weighted score reflects sustained downside momentum with moderate strength.
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Step 2: Condition Check and Trading Plan
Condition Check
#### Maintain Watch Conditions
- 【×】Pattern Analysis and Indicator Analysis Conflict: Both indicate bearish bias (Pattern: -6, Indicator: -6) → No conflict
- 【×】Abnormal Volatility: ATR = 24.8, stable; no erratic moves → Normal volatility
- 【×】Data Window: Current time is 2025.10.28 18:45 UTC+8; no mention of economic events → No known high-impact event nearby
#### Plan Long Conditions
- 【×】Breakout Retest
- 【×】Bull Flag
- 【×】Volume Breakout
- 【×】Support Holding: Price tested 3897 twice, bounced slightly — partial, but no strong confirmation
- 【×】Bullish Divergence: RSI rising while price falling? Partial divergence exists but not strong enough
- 【×】First Pullback after MA Bullish Alignment: Not applicable — MA alignment is bearish
- 【×】Volume Break above the Neckline of a W Bottom: Not triggered — price hasn’t broken 3935–3940
- 【×】Upward Breakout from an Ascending Triangle: No such pattern
- 【×】Narrow Range Consolidation after Strong Breakout: No breakout occurred
- 【×】Successful Retest of Former Resistance as New Support: Not observed
#### Plan Short Conditions
- 【✓】Resistance Holding: Price attempted move toward 3935 (R1), failed previously; now trading well below
- 【✓】Weak Rally Unable to Reclaim Key Resistance after Breakdown: After breakdown below 3968, rally stalled under 3935
- 【×】Breakdown Rally: Not clearly defined
- 【×】Bear Flag: No clear flag pattern
- 【×】Volume Breakdown: Volume not exceptionally high on recent down legs
- 【×】Bearish Divergence: Not evident
- 【×】First Rally after MA Bearish Alignment: Could be developing, but not yet rejected strongly
- 【×】Volume Break below the Neckline of an M Top: No M-top formed
- 【×】Downward Breakdown from a Descending Triangle: No such pattern
- 【×】Failed Retest of Former Support as New Resistance: Possible if 3935 holds — currently valid
- Resistance Holding
- Weak Rally Unable to Reclaim Key Resistance after Breakdown
➡️ Only Plan Short conditions are triggered.
Trading Plan: Plan Short
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Step 3: Signal Adjustment and Optimization
Success Probability Assessment
#### Base Probability Tier Assignment
Triggered signals:
- “Weak Rally Unable to Reclaim Key Resistance after Breakdown” → important signal
- “Resistance Holding” → important signal
No core signals triggered.
But two important signals resonate → qualifies for Medium Probability Base
Base Probability Tier: Medium (65%-75%)
Midpoint = 70%
#### Probability Adjustment
- Condition Factor (Volatility): ATR = 24.8 → Moderate → Treat as Low Volatility Market → Factor = ×1.0
- Quality Adjustment Factor (Analysis Quality):
– Pattern Confidence: High (channel) + Medium (candlesticks) → Medium
– Indicator Consensus: Most indicators agree (HMA, MACD, ADX, VWAP) → Medium
→ Medium Consensus & Confidence → Factor = ×1.0
Final Success Probability = 70% × 1.0 × 1.0 = 70%
Remains within Medium tier (±5% adjustment allowed).
Final Success Probability: 70%
#### Signal Strength Anchoring
Since 70% < 75%, use attenuated signal strength range (1 to 6 for Long, -1 to -6 for Short)
Score from indicator analysis: -6 → already in attenuated range
Signal Strength: -6
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Historical Success Rate Optimization
Previous trading plan (2025.10.28 18:35:01 UTC+8): Plan Short
Price movement until 2025.10.28 18:45:00: From ~3915 → held flat/slight decline → aligned with short direction
Current prediction also Plan Short → Consistent with prior plan and price action
No override required
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Step 4: Generate Trading Signal
- Direction signal: Short
- Trade entry price: >>> 3915.5 <<<
- Signal Strength: =>> -6 <<=
- Stop-Loss price: ->> 3935.75 <<-
- Take-Profit price: +>> 3897.66 <<+
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Step 5: Summary of Analysis Conclusions
The XAUUSD pair remains in a well-defined descending channel on the 1-hour chart, supported by bearish HMA alignment, negative MACD histogram, and price below VWAP. While short-term bullish candlestick patterns (engulfing, hammer) and a potential W-bottom suggest temporary bounce risk, these lack confirmation as price failed to break above key resistance at 3935.75.
Technical indicators collectively confirm a moderate-strength downtrend, with ADX(14)=22.4 indicating directional persistence. The market state is classified as Trend + Low Volatility, prioritizing trend-following strategies.
Two important-tier bearish conditions are met:
- Resistance Holding: Price repeatedly rejected near 3935.
- Weak Rally Unable to Reclaim Key Resistance: Post-breakdown rebound failed to recover critical level.
These justify a short-side strategy with measured risk. Entry set at current price (3915.5), stop-loss above immediate resistance (3935.75), target at recent double bottom support (3897.66). Success probability estimated at 70%, leading to an attenuated signal strength of -6.
Historical consistency with prior accurate short call reinforces confidence. No watch conditions apply.