market-analysis

Market Analysis

Perform technical analysis on crypto tokens using standard indicators, assess volatility regimes, and compare prices across exchanges for best execution.

Technical Analysis Procedure

When the user asks to analyze a token, follow this procedure:

1. Fetch OHLCV data for the requested token and timeframe using a blockchain explorer MCP (Alchemy, Etherscan) or market data API (Birdeye). Minimum 50 bars for trend detection, 100+ bars recommended.

2. Compute indicators using the formulas in references/indicators.md:

   • RSI (14) -- Momentum oscillator, range 0-100
   • MACD (12, 26, 9) -- Trend-following momentum
   • Bollinger Bands (20, 2 sigma) -- Volatility envelope
   • Trend Detection -- SMA 20/50 crossover classification
   • Support/Resistance -- Swing high/low detection

3. Interpret signals and produce a recommendation:

Indicator	Bullish Signal	Bearish Signal
RSI	< 30 (oversold)	> 70 (overbought)
MACD	Positive histogram, MACD above signal	Negative histogram, MACD below signal
Bollinger Bands	Price below lower band (oversold)	Price above upper band (overbought)
Trend	Price > SMA20 > SMA50	Price < SMA20 < SMA50
Support/Resistance	Price bouncing off support	Price rejected at resistance

4. Score confidence (0-100) based on how many indicators agree on direction.

5. Present recommendation: strong_buy, buy, neutral, sell, or strong_sell.

Volatility Analysis

Volatility determines position sizing and risk. Compute these metrics:

• Historical Volatility: Annualized standard deviation of log returns over the last 20 periods. Formula: sqrt(variance_of_log_returns * 365) * 100. See references/indicators.md for full detail.
• ATR (Average True Range): Smoothed average of true range over 14 periods. True Range = max(high-low, |high-prevClose|, |low-prevClose|).
• ATR%: ATR / Price * 100. Normalizes ATR for cross-asset comparison.
• Bollinger Band Width: (Upper - Lower) / Middle * 100. Measures relative volatility.

Volatility Regimes

Regime	Historical Volatility	Position Sizing Implication
Low	< 30%	Can use larger positions (up to max)
Moderate	30% - 60%	Standard position sizing
High	60% - 100%	Reduce position size by 50%
Extreme	> 100%	Reduce position size by 75% or avoid

Exchange Comparison

To find the best execution price for a swap:

1. Query multiple DEX aggregators for the same pair and amount (see references/providers.md for API details):

   • Jupiter for Solana tokens
   • 1inch for EVM tokens (Ethereum, BSC, Arbitrum, Base, Polygon)

2. Compare quotes on: output amount, price impact, estimated gas, and route.

3. Recommend the exchange with the best net output (output amount minus fees and gas).

Data Sources

Use blockchain explorer MCPs (Alchemy, Etherscan) or market data APIs for live data. See references/providers.md for supported providers, endpoints, and chain coverage.