price-action · diff
git:20260717.9d4653a to git:20260731.cf46aef
119 added, 23 removed. Audit A to A.
---
name: price-action
- description: Price action analysis, market structure reading, trend and range identification, support resistance levels, candlestick pattern analysis, breakout and pullback setups, Brooks price action methodology
+ description: Price action market structure analysis, trend vs trading range classification, Always In directional framework, buying/selling pressure analysis, market cycle phase identification, the price action methodology
multi_ticker_semantics: single_target
temporal_scope:
- default_quarters: 4
- max_quarters: 12
- description: "4 quarters default for price-action analysis; up to 12 for regime context."
+ default_quarters: 1
+ max_quarters: 4
+ description: "Technical analysis operates on price data; 1 quarter default for short-to-medium-term setups."
allowed_tools:
- - search_knowledge_entries
- - get_knowledge_entry
- - search_by_analogue
+ - search_technical_setups
+ - get_technical_setup
+ - get_realtime_quote
retrieval_scope: structured_only
- min_tool_diversity: 3
+ layer_tags: ["L4"]
+ min_tool_diversity: 2
parameter_free: false
---
- > Methodology inspired by publicly taught trading frameworks; all text is an original paraphrase.
+ > Methodology inspired by publicly taught price action trading frameworks; all text is an original paraphrase.
## Defaults
| Parameter | Default Value | Rationale |
|-----------|---------------|-----------|
- | lookback_quarters | 4 | Standard window for price-action |
+ | trend_confirmation_bars | 3 | Minimum consecutive bars for trend confirmation |
+ | trading_range_threshold | 20 bars | Pullback > 20 bars becomes a full Trading Range |
+ | reversal_failure_rate | 80% | In a trending market, ~80% of reversal attempts fail and become flags |
+ | inertia_rule | 60-40 | 60% probability trend continues, 40% probability reversal |
## Preflight
Run canonical pre-flight per `contracts/preflight.md`. Propagate X-Agentii-Trace per `contracts/x-agentii-trace-header.md`.
## Data Source Priority
- 1. Knowledge entries (frameworks) -> 2. search_by_analogue for historical analogues -> 3. Real-time context
+ 1. Price action framework — `references/market-structure.md` (bundled market structure methodology)
+ 2. Real-time price data — `get_realtime_quote` for OHLCV and VIX context
+ 3. Technical setups — `search_technical_setups` for matching pattern setups
## Methodology
### Retrieval Scope
structured_only
### Retrieval Strategy
- Query knowledge entries for price-action frameworks; query search_by_analogue for historical analogues.
+ This skill follows Branch (d) Simple Lookup from `contracts/retrieval.md`: the methodology framework is bundled in `references/market-structure.md`. Real-time price data supplements via `get_realtime_quote`. Matched technical setups via `search_technical_setups(market_condition=...)`. No unstructured document retrieval.
### Temporal Scope
See frontmatter temporal_scope block.
### Tool Allowlist
See frontmatter allowed_tools.
### Protocol
- 1. Framework selection
- 2. Signal analysis
- 3. Analogue retrieval
- 4. Risk assessment
+ This skill implements the price action trading framework: market structure analysis using price action alone — no indicators except a 20-bar EMA. The core thesis: **every market is always in one of two states — Trend or Trading Range. If uncertain, it is a Trading Range.** Detailed methodology, definitions, and decision rules are in `references/market-structure.md`.
+
+ #### Step 1 — Macro Context (Mode C — degrade-gracefully)
+
+ Assess the broader market environment before analyzing individual setups.
+
+ 1. Query `get_realtime_quote` for a broad market proxy (SPY/SPX) to assess VIX levels.
+ 2. Determine the macro regime from upstream analysis (expansion/contraction/stagflation/recovery).
+ 3. VIX assessment: elevated (> 25) → tighten position sizing, favor defined-risk setups. Low (< 15) → standard sizing.
+
+ #### Step 2 — Market Structure Identification
+
+ Answer the most important question in price action: **Trend or Trading Range?**
+
+ 1. **Cycle Phase Identification**:
+ - Trend = Series of higher highs/lows (bull) or lower highs/lows (bear). Contains breakout→channel sub-phases.
+ - Trading Range = Sideways movement. ≥ 20 bars = full TR. < 20 bars within a trend = Pullback.
+ - Reversal Signal = Trading Range at a trend extreme that transitions into opposite trend.
+ 2. **Trend Strength Classification**:
+ - **Strong Trend (Breakout/Spike)**: Big bodies, small tails, consecutive bars with little overlap.
+ - **Weak Trend (Channel)**: Bars with visible tails and overlap, contained between two parallel lines.
+ 3. **Pullback vs Trading Range Rule**:
+ - Pullback = < 20 bars pause; breakout likely in trend direction.
+ - Trading Range = ≥ 20 bars; direction lost; breakout equally likely either way.
+ - Fractal check: what appears as a pullback on this timeframe may be a trading range on a lower timeframe.
+
+ #### Step 3 — Directional Bias
+
+ Determine the directional bias using the Always In framework.
+
+ 1. **Ask**: "If forced to enter the market right now, long or short?" Your answer = Always In direction.
+ 2. **If unclear**: the market is in a Trading Range. Confusion = hallmark of TR.
+ 3. **Directional bias rules**:
+ - Always In Long → only consider long setups; ignore short signals even if they look strong.
+ - Always In Short → only consider short setups; ignore long signals.
+ - No clear Always In → Trading Range mode: Buy Low, Sell High, scalp only.
+
+ #### Step 4 — Pressure Analysis
+
+ Identify which side (bulls/bears) is applying dominant pressure.
+
+ 1. **Bar-by-bar assessment**:
+ - Close near high = bulls dominated through bar's life.
+ - Close near low = bears dominated.
+ - Long tail above = bears aggressively sold higher prices → failed breakout upward.
+ - Long tail below = bulls aggressively bought lower prices → failed breakout downward.
+ 2. **Every tail is a failed breakout** — it was once a strong trend body that got reversed. Tails signal the failure of one side.
+ 3. **Context override**: A small body in a strong trend behaves as a trend bar. A big body in a sideways market behaves as a trading range bar. Context always overrides individual bar appearance.
+
+ #### Step 5 — Momentum Assessment
+
+ Assess momentum using the 20-60 day framework: Technical Analysis (patterns/formations) provides the big picture over weeks to months. Price Action (momentum) provides the near-term directional signal over days to weeks. Both must align for a trade to have favorable timing.
+
+ 1. **RSI (Relative Strength Index)** — 14-day and 20-day:
+ - Above 70 = overbought; below 30 = oversold.
+ - RSI reversing from overbought = momentum fading from the upward move.
+ - Avoid entering longs when RSI is overbought and falling; avoid shorts when RSI is oversold and rising.
+ - Treat "overbought" and "oversold" with caution: a strong trend can stay overbought/oversold for extended periods.
+
+ 2. **Moving Averages** — SMA and EMA at 20, 60, 120, and 250 periods:
+ - Price above rising MA = bullish momentum confirmed.
+ - Price below falling MA = bearish momentum confirmed.
+ - MA convergence/flattening = momentum weakening, potential transition.
+
+ 3. **MACD (Moving Average Convergence Divergence)**:
+ - Standard: (12, 26, 9). Extended: (20, 60, 10) and (20, 60, 20) for longer timeframes.
+ - MACD line crossing above signal line = bullish momentum shift.
+ - MACD line crossing below signal line = bearish momentum shift.
+ - Divergence between MACD and price = potential reversal signal.
+
+ 4. **Heikin Ashi Candles**: Use for smoothing price action and identifying sustained momentum. Consecutive Heikin Ashi bars without lower shadows = strong bull momentum. Without upper shadows = strong bear momentum.
+
+ 5. **Timing Assessment (Traffic-Light System)**:
+ - Green: Market structure + momentum + Always In direction all aligned → favorable entry timing.
+ - Amber: Partial alignment, some conflicting signals → caution; reduce position size or wait.
+ - Red: Conflicting signals across structure/momentum/direction → do not enter; wait for clearer conditions.
+
+ #### Step 6 — Setup Context Handoff
+
+ Produce the market structure output to be consumed by downstream skills.
+
+ 1. **Output classification**:
+ - `market_condition`: `trending_up` / `trending_down` / `ranging`
+ - `trend_strength`: `strong` / `weak` / `none`
+ - `always_in_direction`: `long` / `short` / `neutral`
+ - `cycle_phase`: `breakout` / `channel` / `trading_range` / `reversal`
+ 2. **Handoff to `chart-patterns`**: The context above determines which patterns are valid. In a strong bull trend, only long patterns are valid — all short patterns are ignored regardless of how strong they appear.
+ 3. **MCP retrieval**: `search_technical_setups(market_condition=<derived>)` for rough matching against `gold.technical_setups`.
+
## Output File
`{ticker}/{YYYY-MM-DD_HHMM}_price-action_{affix}.md`
## Output Structure
- 1. **Executive Summary** — key findings in 2-3 sentences
- 2. **Core Analysis** — applied frameworks with specific evidence
- 3. **Quantitative Indicators** — key metrics and benchmarks
- 4. **Historical Analogues** — matched cases with /v/ citations
- 5. **Risk Assessment** — key risk factors and mitigants
- 6. **Coverage Gaps** — data limitations and degraded flags
+ 1. **Executive Summary** — Market state (Trend/TR), Always In direction, cycle phase with confidence level
+ 2. **Market Structure Analysis** — Trend strength, cycle phase, pullback vs trading range classification with specific bar counts
+ 3. **Always In Assessment** — Directional bias, rationale, confidence level
+ 4. **Pressure Analysis** — Bull/bear dominance assessment, key tail/bodie signals on recent bars
+ 5. **Transition Signals** — Early warning signals of cycle phase change (channel flattening, TR forming at extreme)
+ 6. **Pattern Context** — Valid pattern directions for downstream chart-patterns skill
+ 7. **Coverage Gaps** — Data limitations and degraded-mode annotations
## Error Handling
| Error | Fallback |
|-------|----------|
- | No frameworks | Proceed with standard indicators; flag degraded |
+ | No price data available | Proceed with static market structure principles; flag degraded |
+ | `search_technical_setups` unreachable | Skip MCP step; provide manual pattern analysis |
+ | Ambiguous market state | Classify as Trading Range; note ambiguity |
## Memory Load
See `contracts/memory-load.md`.
## Snapshot
See `contracts/snapshot-synthesis.md`.
## Final Summary (TUI)
Include ### Key Citations block with 0-10 clickable /v/ URLs.
## References
+ - `references/market-structure.md`
- `contracts/citation-and-memory.md`
- `contracts/output-frontmatter-schema.md`
- `contracts/memory-load.md`
- `contracts/snapshot-synthesis.md`
- `contracts/preflight.md`
+ - `contracts/retrieval.md`