Technical Analysis

Technical Analysis

Perform technical analysis of US stocks using price action, chart patterns, and technical indicators.

Chart Pattern Analysis

1. Trend Identification

   • Primary trend (uptrend, downtrend, sideways)
   • Trend strength and momentum
   • Support and resistance levels
   • Trendline analysis

2. Classic Chart Patterns

   • Head and shoulders, inverse H&S
   • Double/triple tops and bottoms
   • Cup and handle
   • Triangles (ascending, descending, symmetrical)
   • Flags and pennants
   • Wedges and channels

3. Candlestick Patterns

   • Reversal patterns (doji, hammer, shooting star, engulfing)
   • Continuation patterns
   • Multi-candle formations

Technical Indicators

1. Trend Indicators

   • Moving averages (SMA, EMA: 20, 50, 200-day)
   • Moving average crossovers
   • MACD (Moving Average Convergence Divergence)
   • ADX (Average Directional Index)

2. Momentum Indicators

   • RSI (Relative Strength Index)
   • Stochastic oscillator
   • Williams %R
   • Rate of Change (ROC)

3. Volume Indicators

   • Volume trends and patterns
   • On-Balance Volume (OBV)
   • Volume-weighted average price (VWAP)
   • Accumulation/Distribution line

4. Volatility Indicators

   • Bollinger Bands
   • Average True Range (ATR)
   • Volatility Index correlation

Price Levels

• Key support and resistance zones
• Fibonacci retracement levels
• Pivot points
• Round number psychology
• Gap analysis

Market Context

• Relative strength vs. market indices
• Sector rotation analysis
• Market breadth indicators
• Correlation with related assets

Chart Visualization Support

When --chart flag is used, include chart specifications and data tables:

1. Price Chart with Moving Averages

Chart Type: Candlestick chart with overlay lines Data Table:

Date        Open      High      Low       Close     Volume      SMA_20    SMA_50    SMA_200
2024-01-01  [price]   [price]   [price]   [price]   [volume]    [price]   [price]   [price]
2024-01-02  [price]   [price]   [price]   [price]   [volume]    [price]   [price]   [price]
...
[Last 90 trading days for detailed view]

Visual Specifications:

• Candlesticks: Green for up days, red for down days
• SMA 20: Blue line (short-term trend)
• SMA 50: Orange line (intermediate trend)
• SMA 200: Purple line (long-term trend)
• Support/resistance: Horizontal dashed lines with labels

2. Volume Bars

Chart Type: Bar chart (synchronized with price chart) Data Table:

Date        Volume      Avg_Volume_20    Above_Avg    Color
2024-01-01  [volume]    [volume]         [Yes/No]     [Green/Red]
2024-01-02  [volume]    [volume]         [Yes/No]     [Green/Red]
...

Visual Specifications:

• Green bars: Volume on up days
• Red bars: Volume on down days
• Dashed line: 20-day average volume
• Highlight bars exceeding 2x average volume

3. RSI Indicator Panel

Chart Type: Line chart with overbought/oversold zones Data Table:

Date        RSI_14    Overbought_70    Oversold_30    Signal
2024-01-01  [value]   70               30             [Neutral/OB/OS]
2024-01-02  [value]   70               30             [Neutral/OB/OS]
...

Visual Specifications:

• RSI line: Blue
• Overbought zone (>70): Red shaded area
• Oversold zone (<30): Green shaded area
• Midline (50): Dashed gray line
• Divergence annotations if present

4. MACD Indicator Panel

Chart Type: Line chart with histogram Data Table:

Date        MACD      Signal    Histogram    Crossover
2024-01-01  [value]   [value]   [value]      [None/Bullish/Bearish]
2024-01-02  [value]   [value]   [value]      [None/Bullish/Bearish]
...

Visual Specifications:

• MACD line: Blue
• Signal line: Red
• Histogram: Green (positive), Red (negative)
• Zero line: Black dashed
• Crossover markers: Arrows or dots

5. Bollinger Bands

Chart Type: Overlay on price chart Data Table:

Date        Price     BB_Upper    BB_Middle    BB_Lower    %B       Bandwidth
2024-01-01  [price]   [price]     [price]      [price]     [value]  [value]
2024-01-02  [price]   [price]     [price]      [price]     [value]  [value]
...

Visual Specifications:

• Upper band: Red dashed line
• Middle band (20 SMA): Blue solid line
• Lower band: Green dashed line
• Shaded area between bands: Light gray
• Price line: Black candlesticks

6. Support & Resistance Levels

Annotation Overlay:

Level Type       Price      Strength    Touches    Last Test    Notes
Resistance       $[price]   Strong      5          [date]       Historical high
Resistance       $[price]   Medium      3          [date]       Recent rejection
Support          $[price]   Strong      4          [date]       Key accumulation zone
Support          $[price]   Weak        2          [date]       Minor bounce level
Fibonacci 61.8%  $[price]   N/A         -          -            Retracement level

7. Pattern Recognition Annotations

Chart Overlays:

Pattern Type              Start Date    End Date      Status        Target        Risk/Reward
Head & Shoulders          2024-01-15    2024-02-10    Confirmed     $[price]      1:3.2
Ascending Triangle        2024-02-01    Current       Forming       $[price]      1:2.5
Flag Pattern             2024-02-05    2024-02-08    Complete      $[price]      1:2.8

Visual Elements:

• Pattern boundaries: Colored rectangles or polygons
• Trendlines: Dashed connecting lines
• Breakout points: Arrows indicating direction
• Target levels: Horizontal lines with labels

ASCII Chart Example (Terminal Display)

Technical Chart: AAPL (Last 30 Days)

Price ($)
180 ┤                                    ╭─╮
175 ┤                              ╭─────╯ ╰─╮
170 ┤                        ╭─────╯         ╰──╮
165 ┤                  ╭─────╯                  ╰─╮  ← Current: $172.50
160 ┤            ╭─────╯                          ╰──
155 ┤      ╭─────╯                                      SMA 20: $168.23
150 ┤──────╯                                            SMA 50: $165.80
    └──┬─────┬─────┬─────┬─────┬─────┬─────┬──          ══════ Resistance: $178
     1/15  1/22  1/29  2/05  2/12  2/19  2/26          ══════ Support: $155

RSI (14)
 70 ┤                                    ● ← 68 (approaching OB)
 50 ┤                        ●     ●
 30 ┤            ●
    └──┬─────┬─────┬─────┬─────┬─────┬─────┬──

Volume (M)
100M┤                                    █
 75M┤                              █     █
 50M┤            █     █     █     █  █  █  █
 25M┤      █  █  █  █  █  █  █  █  █  █  █  █
    └──┬─────┬─────┬─────┬─────┬─────┬─────┬──

Signals:
↗ Bullish: Price above SMA 20 & 50
● RSI approaching overbought (68) - potential pullback
📊 Volume increasing on up days - healthy uptrend
🎯 Target: $178 (resistance), Stop: $165 (below SMA 50)

Integration with Report Generator

When --chart flag is used, output is optimized for /report-generator:

• All chart data tables formatted for Chart.js/Plotly
• Color schemes specified for consistent visualization
• Annotations and overlays clearly defined
• Time axis formatting (date range, granularity)
• Y-axis scaling recommendations (log scale for long-term charts)

Chart Configuration Recommendations

Timeframe Selection:

• Day Trading: 1-minute to 1-hour candles, last 5-10 days
• Swing Trading: 4-hour to daily candles, last 3-6 months
• Position Trading: Daily to weekly candles, last 1-3 years

Indicator Combinations:

• Trend Following: SMA 50/200 + MACD + ADX
• Mean Reversion: Bollinger Bands + RSI + Stochastic
• Momentum: RSI + MACD + Volume
• Breakout: Bollinger Bands + Volume + Pattern Recognition

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Multi-Timeframe Analysis (MTF)

Framework

Analyze 3 timeframes simultaneously — higher timeframe establishes the trend, primary timeframe identifies the setup, lower timeframe refines the entry. Trade only in the direction of the higher timeframe trend.

Trading Setups by Approach

Approach	Higher TF (Trend)	Primary TF (Setup)	Lower TF (Entry)
Day Trading	Weekly	Daily	1-Hour
Swing Trading	Monthly	Weekly	Daily
Position Trading	Quarterly	Monthly	Weekly

MTF Alignment Scoring

Alignment Score	Interpretation
3/3 Bullish	Strong long setup — all timeframes confirm uptrend
3/3 Bearish	Strong short setup — all timeframes confirm downtrend
2/3 Aligned	Moderate setup — primary direction clear, minor conflict
1/3 Aligned	Weak/conflicting — avoid new positions, wait for clarity
0/3 Aligned	Contradiction across all timeframes — no trade

MTF Confluence Table

Timeframe	Trend Direction	Key Signal	Support	Resistance	Alignment
Higher TF
Primary TF
Lower TF
Overall		Score: X/3

MTF Integration with --chart Flag

When --chart is used, MTF analysis adds the following data tables for report generation:

MTF Summary Table:
Timeframe   Candle   MA Trend    RSI     MACD       Volume Trend   Signal
Weekly      [data]   [Up/Down]   [val]   [Bull/Bear] [Rising/Fall]  [Bullish/Bearish/Neutral]
Daily       [data]   [Up/Down]   [val]   [Bull/Bear] [Rising/Fall]  [Bullish/Bearish/Neutral]
4-Hour      [data]   [Up/Down]   [val]   [Bull/Bear] [Rising/Fall]  [Bullish/Bearish/Neutral]
Alignment Score: X/3

Rule: Never take a trade rated 1/3 or lower on MTF alignment. Wait for 2/3 minimum before entry.

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Volume Profile Analysis

Key Concepts

• Point of Control (POC): The price level with the highest volume traded over the selected period. Acts as a magnetic price level — markets frequently return to and consolidate around the POC.
• Value Area (VA): The price range where approximately 70% of total volume was traded. Defines the "fair value zone" as agreed upon by market participants.
• Value Area High (VAH): Upper boundary of the Value Area. Strong resistance when price is approaching from below.
• Value Area Low (VAL): Lower boundary of the Value Area. Strong support when price is approaching from above.
• Low Volume Node (LVN): A price range with minimal volume. Price passes through LVNs quickly — acts as a gap zone.
• High Volume Node (HVN): A price range with dense volume. Price is magnetically attracted and consolidates around HVNs.

Volume Profile Shapes

Shape	Description	Implication
Normal (Bell Curve)	Symmetric distribution, clear POC in the middle	Balanced, range-bound market — fair value accepted
P-Shape	High volume at top, thin tail at bottom	Buying tail below = short-covering rally, bullish
b-Shape	High volume at bottom, thin tail at top	Selling tail above = distribution/top, bearish
Double Distribution	Two high-volume nodes with low-volume gap between	Market in transition — break of LVN is directional
Thin Profile	Volume evenly spread, no clear POC	Trending market — follow the trend, no anchoring

Volume Profile Trading Rules

Scenario	Interpretation	Action
Price > VAH (above Value Area)	Bullish — market accepted higher prices, strong trend	Buy breakouts above VAH with volume
Price < VAL (below Value Area)	Bearish — market rejected higher prices, breakdown	Sell breakdowns below VAL with volume
Price at POC	High acceptance zone — balanced, range-bound likely	Fade edges of range; buy VAL, sell VAH
Price enters LVN (thin area)	Fast move — price moves quickly through low-volume gap	Expect acceleration; don't fade momentum
Price at HVN	Magnetic zone — consolidation, range trade likely	Mean-reversion strategies appropriate

Session vs. Composite Profile

• Session Profile: Volume profile for a single trading day or week. Identifies intraday POC, VAH, VAL.
• Composite Profile: Aggregated over weeks, months, or custom date range. Identifies major structural levels.
• Integration rule: Composite HVNs = major structural support/resistance levels. LVNs = breakout acceleration zones. Session POC = short-term magnet.

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Advanced Indicators: Ichimoku Cloud

Five Components

Component	Calculation	Default Period	Purpose
Tenkan-sen	(9-period High + 9-period Low) / 2	9 periods	Short-term trend / momentum line
Kijun-sen	(26-period High + 26-period Low) / 2	26 periods	Medium-term trend / baseline
Senkou Span A	(Tenkan-sen + Kijun-sen) / 2, plotted 26 ahead	Leading	Fast cloud boundary
Senkou Span B	(52-period High + 52-period Low) / 2, plotted 26 ahead	52 periods	Slow cloud boundary
Chikou Span	Current close plotted 26 periods back	Lagging	Confirms trend vs. historical price

The shaded area between Senkou Span A and Senkou Span B is the Kumo (Cloud).

Bullish Ichimoku Signals

Signal	Condition	Strength
Price above Cloud	Price above both Span A and Span B	Base condition
Green Cloud	Span A > Span B (cloud is green/bullish)	Trend support
TK Cross (Bullish)	Tenkan-sen crosses above Kijun-sen	Medium signal
TK Cross above Cloud	Bullish TK cross while price is above the cloud	Strong signal
Chikou above price	Chikou Span is above historical price 26 periods ago	Confirms uptrend
All 5 elements aligned	All conditions bullish simultaneously	Strongest signal

Bearish Ichimoku Signals

Signal	Condition	Strength
Price below Cloud	Price below both Span A and Span B	Base condition
Red Cloud	Span B > Span A (cloud is red/bearish)	Trend resistance
TK Cross (Bearish)	Tenkan-sen crosses below Kijun-sen	Medium signal
TK Cross below Cloud	Bearish TK cross while price is below the cloud	Strong signal
Chikou below price	Chikou Span is below historical price 26 periods ago	Confirms downtrend
All 5 elements aligned	All conditions bearish simultaneously	Strongest signal

Kumo Twist

• A Kumo Twist occurs when Senkou Span A and Span B cross — changing the cloud color from green to red (bearish twist) or red to green (bullish twist).
• The cloud is plotted 26 periods ahead, so a Kumo Twist is an early warning signal visible in advance.
• Thin cloud: Weak support/resistance — price can break through easily.
• Thick cloud: Strong support/resistance — price will struggle to penetrate.

Ichimoku Signal Strength Matrix

# Bullish Conditions Met	Signal Grade	Suggested Bias
5/5	Maximum Bullish	Strong long bias
4/5	Strong Bullish	Long bias
3/5	Moderate Bullish	Lean long
2/5	Mixed / Transitioning	Neutral
1/5 or 0/5	Bearish	Short bias

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Options Flow Integration

Put/Call Ratio Interpretation

The Put/Call ratio measures options market sentiment — the ratio of put volume to call volume on a given day.

P/C Ratio	Interpretation
< 0.6	Extreme bullishness / complacency — contrarian warning (overbought)
0.6–0.7	Bullish — call buyers dominating, positive sentiment
0.7–1.0	Neutral — balanced activity
1.0–1.3	Bearish fear — put buyers dominating, defensive hedging
> 1.3	Extreme fear — potential contrarian buy signal (maximum bearishness)

CBOE Total P/C vs. Equity-Only P/C: Equity-only P/C more directly reflects retail/institutional directional bets (excludes index hedging).

Unusual Options Activity (UOA) Signals

• Large block trades: Single orders of 500+ contracts, especially OTM (out-of-the-money)
• OTM sweeps: Aggressive market orders sweeping multiple exchanges at ask — directional conviction
• Dark pool prints: Large, off-exchange block prints can signal institutional accumulation/distribution
• Short-dated OTM calls on takeover candidates: One of the most reliable pre-announcement signals
• Key UOA filters: Volume > 5x open interest, expiry within 30 days, OTM strike, market order execution

Implied Volatility (IV) vs. Historical Volatility (HV)

Condition	Description	Options Strategy Implication
IV >> HV	Options are expensive — market pricing elevated moves	Premium selling opportunity (write options)
IV ≈ HV	Options fairly priced	No directional vol edge
IV << HV	Options are cheap — market underpricing moves	Buying options (long vol opportunity)

• IV Rank (IVR): Current IV relative to its 52-week range. IVR > 50 = elevated; IVR < 25 = depressed.
• IV Percentile: % of days in the past year where IV was lower than current. More robust than IV Rank.

Max Pain Theory

• Max Pain = The strike price at which the total value of all outstanding options (puts and calls) would expire worthless — the price that causes maximum loss for option buyers.
• Near expiration, market prices have a tendency to gravitate toward the max pain level (due to dealer hedging flows).
• Most useful in the final 5–7 days before monthly options expiration (OPEX).
• Application: If stock is significantly above max pain near OPEX, short-term mean reversion is possible.

Gamma Exposure (GEX) and Spot Price Impact

• Gamma measures how much a dealer's delta changes per $1 move in the underlying.
• Positive GEX (Dealer Long Gamma): Dealers buy into dips and sell into rallies — suppresses volatility, market stays range-bound.
• Negative GEX (Dealer Short Gamma): Dealers sell into dips and buy into rallies — amplifies moves, increases volatility.
• GEX Flip Level: The price at which market transitions from positive to negative gamma — crossing this level can accelerate directional moves.
• Practical rule: Low realized volatility + tightening range = likely high positive GEX environment. Breakouts become more powerful when negative GEX zone is entered.

Note: This section provides interpretive framework. Actual real-time options flow data, IV readings, and GEX levels must be sourced from the user's options data provider (e.g., Market Chameleon, Unusual Whales, SpotGamma, Thinkorswim).

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Output

Provide technical analysis report with:

• Current trend and momentum assessment
• Key chart patterns identified
• Support and resistance levels
• Technical indicator signals
• Volume and volatility analysis
• Entry/exit points and price targets
• Stop-loss recommendations
• Risk/reward ratio for trade setups
• Time horizon (short-term, swing, position trading)
• MTF alignment score and summary table
• Ichimoku Cloud status (price above/below/inside cloud)
• Volume Profile POC, VAH, VAL levels

Enhanced Output (with --chart flag)

• All standard output sections above
• Chart data tables for price, volume, and indicators
• MTF confluence table with signal direction per timeframe
• ASCII charts for terminal display
• Pattern recognition overlays with annotations
• Support/resistance level visualizations
• Volume Profile data (POC, VA, LVN/HVN zones)
• Technical indicator panels (RSI, MACD, Bollinger Bands, Ichimoku)
• Chart specifications for HTML report generation
• Color-coded signals (bullish/bearish/neutral)

Keep analysis objective and data-driven, avoiding emotional bias.

Standard Signal Output

All analysis concludes with this standardized block:

╔══════════════════════════════════════════════╗
║              INVESTMENT SIGNAL               ║
╠══════════════════════════════════════════════╣
║ Signal:      BULLISH / NEUTRAL / BEARISH     ║
║ Confidence:  HIGH / MEDIUM / LOW             ║
║ Horizon:     SHORT / MEDIUM / LONG-TERM      ║
║ Score:       X.X / 10                        ║
╠══════════════════════════════════════════════╣
║ Action:      BUY / HOLD / SELL               ║
║ Conviction:  STRONG / MODERATE / WEAK        ║
╚══════════════════════════════════════════════╝

Score Guide: 8.0–10.0 Strongly Bullish | 6.0–7.9 Moderately Bullish | 4.0–5.9 Neutral | 2.0–3.9 Moderately Bearish | 0.0–1.9 Strongly Bearish Confidence: HIGH (strong data, clear signals) | MEDIUM (mixed signals) | LOW (limited data, conflicting signals) Horizon: SHORT-TERM (1 week–3 months) | MEDIUM-TERM (3 months–1 year) | LONG-TERM (1+ years)