technical-analysis

name: technical-analysis description: Use this skill for analyzing technical indicators like RSI, MACD, Moving Averages, Bollinger Bands, and price action patterns to assess market trends and momentum.

Overview

This skill provides comprehensive guidance on analyzing technical indicators to evaluate market conditions and generate trading signals. Use this for any technical analysis-related questions or when you need to interpret indicator values.

Instructions

1. Understand Key Technical Indicators

RSI (Relative Strength Index)

Range: 0-100
Oversold: < 30 (potential buy signal)
Overbought: > 70 (potential sell signal)
Divergence: Price makes new high/low but RSI doesn't (reversal signal)

MACD (Moving Average Convergence Divergence)

Components: MACD line, Signal line, Histogram
Bullish crossover: MACD crosses above signal line
Bearish crossover: MACD crosses below signal line
Histogram: Shows momentum strength

Moving Averages

Short-term (SMA/EMA 20): Recent trend
Medium-term (SMA/EMA 50): Intermediate trend
Long-term (SMA/EMA 200): Major trend
Golden cross: 50 MA crosses above 200 MA (bullish)
Death cross: 50 MA crosses below 200 MA (bearish)

Bollinger Bands

Upper/Lower bands: Volatility boundaries
Price near upper band: Potentially overbought
Price near lower band: Potentially oversold
Band squeeze: Low volatility (potential breakout coming)
Band expansion: High volatility (trend in motion)

2. Analyze Multiple Timeframes

When analyzing indicators, consider multiple timeframes:

1H/4H: Short-term trading signals
1D: Medium-term trend confirmation
1W: Long-term trend direction

Higher timeframes carry more weight for trend direction.

3. Look for Indicator Convergence

Strong signals occur when multiple indicators agree:

RSI oversold + MACD bullish crossover + price above 50 MA = Strong buy
RSI overbought + MACD bearish crossover + price below 50 MA = Strong sell

4. Assess Trend Strength

Determine if the market is:

Strong uptrend: Price above all MAs, RSI 50-70, MACD positive and rising
Strong downtrend: Price below all MAs, RSI 30-50, MACD negative and falling
Ranging/Consolidation: Price oscillating around MAs, RSI 40-60, MACD near zero

5. Identify Support and Resistance

Previous highs/lows
Moving averages acting as dynamic support/resistance
Bollinger Bands as volatility-based support/resistance
Round numbers (psychological levels)

6. Volume Analysis

Rising volume on breakouts confirms strength
Declining volume on rallies suggests weakness
Volume spikes often precede reversals

Output Format

When analyzing technical indicators, provide:

{
  "eval_note": <float -1 to 1>,
  "confidence": <float 0-1>,
  "trend": "uptrend" | "downtrend" | "ranging",
  "key_indicators": ["RSI oversold at 28", "MACD bullish crossover", "Price above 50 MA"],
  "description": "Detailed analysis explaining the reasoning"
}

Common Patterns

Bullish Reversal Signs

RSI divergence (price lower low, RSI higher low)
MACD histogram turning positive
Price bouncing off support
Volume spike on upward move

Bearish Reversal Signs

RSI divergence (price higher high, RSI lower high)
MACD histogram turning negative
Price rejected at resistance
Volume spike on downward move

Best Practices

Never rely on a single indicator - use multiple confirmations
Consider the broader market context and trend
Account for timeframe - align trade direction with higher timeframe trend
Adjust interpretation for different market conditions (trending vs ranging)
Be aware of false signals in choppy, low-volume markets