From 3c9da22a8a3cd122a8021d8aa987d6cd0a83b62c Mon Sep 17 00:00:00 2001
From: mindesbunister <github_service@egonetix.de>
Date: Fri, 7 Nov 2025 12:19:41 +0100
Subject: [PATCH] Add ADX > 18 requirement for extreme price positions
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- Shorts/longs at < 15% range require ADX > 18 AND volume > 1.2x
- OR RSI < 35 for shorts, RSI > 60 for longs
- Increased penalty from -10 to -15 when conditions not met
- Changed threshold from < 5% to < 15% to catch more edge cases

Test results:
- Big loser (01:35): ADX 16.1, price 9.3% → Score 60 (was 90) → BLOCKED
- Today's signal (10:05): ADX 17.3, price 0.9% → Score 55 (was 85) → BLOCKED

Rationale: False breakdowns in choppy ranges (ADX < 18) cause losses.
Tradeoff: May block some profitable breakdowns, but prevents chop losses.
---
 lib/trading/signal-quality.ts | 37 +++++++++++++++++++++++------------
 1 file changed, 24 insertions(+), 13 deletions(-)

diff --git a/lib/trading/signal-quality.ts b/lib/trading/signal-quality.ts
index f790beb..468d999 100644
--- a/lib/trading/signal-quality.ts
+++ b/lib/trading/signal-quality.ts
@@ -173,24 +173,35 @@ export function scoreSignalQuality(params: {
         score -= 15
         reasons.push(`Price near top of range (${params.pricePosition.toFixed(0)}%) - risky long`)
       }
-    } else if (params.direction === 'short' && params.pricePosition < 5) {
-      // High volume breakdown at range bottom can be good
-      // Also allow if RSI is bearish (< 40) - breakdowns continue lower
-      if (params.volumeRatio > 1.2 || (params.rsi > 0 && params.rsi < 40)) {
+    } else if (params.direction === 'short' && params.pricePosition < 15) {
+      // Shorts near range bottom (< 15%) require strong confirmation
+      // Require STRONG trend (ADX > 18) to avoid false breakdowns in choppy ranges
+      // OR very bearish RSI (< 35) indicating strong momentum continuation
+      const hasStrongTrend = params.adx > 18
+      const isVeryBearish = params.rsi > 0 && params.rsi < 35
+      const hasGoodVolume = params.volumeRatio > 1.2
+      
+      if ((hasGoodVolume && hasStrongTrend) || isVeryBearish) {
         score += 5
-        reasons.push(`Valid breakdown at range bottom (${params.pricePosition.toFixed(0)}%, vol ${params.volumeRatio.toFixed(2)}x, RSI ${params.rsi.toFixed(1)})`)
+        reasons.push(`Valid breakdown at range bottom (${params.pricePosition.toFixed(0)}%, vol ${params.volumeRatio.toFixed(2)}x, ADX ${params.adx.toFixed(1)}, RSI ${params.rsi.toFixed(1)})`)
       } else {
-        score -= 10
-        reasons.push(`Price near bottom of range (${params.pricePosition.toFixed(0)}%) - reduced penalty for short`)
+        score -= 15
+        reasons.push(`Price near bottom (${params.pricePosition.toFixed(0)}%) - need ADX > 18 or RSI < 35 for breakdown`)
       }
-    } else if (params.direction === 'long' && params.pricePosition < 5) {
-      // Longs at bottom with good volume = potential reversal
-      if (params.volumeRatio > 1.2 || (params.rsi > 0 && params.rsi > 60)) {
+    } else if (params.direction === 'long' && params.pricePosition < 15) {
+      // Longs near range bottom (< 15%) require strong reversal confirmation
+      // Require STRONG trend (ADX > 18) to avoid catching falling knives
+      // OR very bullish RSI (> 60) after bounce showing momentum shift
+      const hasStrongTrend = params.adx > 18
+      const isVeryBullish = params.rsi > 0 && params.rsi > 60
+      const hasGoodVolume = params.volumeRatio > 1.2
+      
+      if ((hasGoodVolume && hasStrongTrend) || isVeryBullish) {
         score += 5
-        reasons.push(`Potential reversal at bottom (${params.pricePosition.toFixed(0)}%, vol ${params.volumeRatio.toFixed(2)}x, RSI ${params.rsi.toFixed(1)})`)
+        reasons.push(`Potential reversal at bottom (${params.pricePosition.toFixed(0)}%, vol ${params.volumeRatio.toFixed(2)}x, ADX ${params.adx.toFixed(1)}, RSI ${params.rsi.toFixed(1)})`)
       } else {
-        score -= 10
-        reasons.push(`Price near bottom (${params.pricePosition.toFixed(0)}%) - reduced penalty for reversal long`)
+        score -= 15
+        reasons.push(`Price near bottom (${params.pricePosition.toFixed(0)}%) - need ADX > 18 or RSI > 60 for reversal`)
       }
     } else {
       score += 5