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# Technical Analysis

## Overview

The technical analysis module processes raw market data through multiple analytical lenses to identify high-probability trading setups within the 30-minute hold constraint.

## Analysis Categories

### 1. Trend Indicators

| Indicator | Parameters | Signal |
|---|---|---|
| EMA Cross | 9/21 periods | Bullish/Bearish cross |
| MACD | 12/26/9 | Histogram divergence |
| ADX | 14 periods | Trend strength > 25 |
| Parabolic SAR | 0.02/0.2 | Trend reversal dots |

### 2. Momentum Indicators

| Indicator | Parameters | Signal |
|---|---|---|
| RSI | 14 periods | Oversold < 30, Overbought > 70 |
| Stochastic | 14/3/3 | %K/%D crossover |
| CCI | 20 periods | Extreme readings ±200 |
| Williams %R | 14 periods | Reversal zones |

### 3. Volatility Indicators

| Indicator | Parameters | Signal |
|---|---|---|
| Bollinger Bands | 20/2σ | Band squeeze/expansion |
| ATR | 14 periods | Position sizing, stop distance |
| Keltner Channels | 20/1.5 | Breakout confirmation |

### 4. Volume Analysis

| Indicator | Parameters | Signal |
|---|---|---|
| VWAP | Session | Price vs fair value |
| OBV | Cumulative | Divergence from price |
| Volume Profile | Session | Key levels, POC |

## Pattern Recognition

### Candlestick Patterns (1-5 bar)
- **Reversal**: Hammer, Shooting Star, Engulfing, Morning/Evening Star
- **Continuation**: Three White Soldiers, Rising/Falling Three Methods
- **Indecision**: Doji, Spinning Top, Harami

### Chart Patterns (Multi-bar)
- Double Top/Bottom
- Head & Shoulders
- Ascending/Descending Triangles
- Bull/Bear Flags
- Wedges

## Confluence Scoring

Signals are scored based on **confluence** — multiple indicators agreeing:

```python
def calculate_confluence_score(signals: list[IndicatorSignal]) -> float:
    """
    Score 0.0 - 1.0 based on how many indicators agree.
    
    Weights:
    - Trend alignment: 0.30
    - Momentum confirmation: 0.25
    - Volume confirmation: 0.20
    - Pattern match: 0.15
    - Key level proximity: 0.10
    """
    weights = {
        'trend': 0.30,
        'momentum': 0.25,
        'volume': 0.20,
        'pattern': 0.15,
        'level': 0.10
    }
    
    score = sum(
        weights[s.category] * s.strength 
        for s in signals 
        if s.direction == consensus_direction(signals)
    )
    return min(score, 1.0)
```

**Minimum confluence threshold for signal generation: 0.65**

## Timeframe Analysis

Given the 30-minute max hold constraint:

| Timeframe | Purpose |
|---|---|
| 1-minute | Entry timing, micro-structure |
| 5-minute | Primary signal generation |
| 15-minute | Trend context, S/R levels |
| 1-hour | Bias direction (trend filter) |

## Backtesting Requirements

- Minimum 30 days historical data
- Walk-forward optimization
- Out-of-sample validation
- Maximum drawdown tracking
- Sharpe ratio > 1.5 target