This system combines the Collatz 3x+1 theory with technical indicators (RSI, ADX, DI) to analyze price movements and generate trading signals. The working mechanism can be explained as follows:
ADX and Directional Indicators:
ADX and DI+ with DI- are used to calculate the strength and direction of the trend in the market. The difference between DI+ and DI- serves as the basis for determining the directional movement of the price. Collatz Sequence Application:
The difference between DI+ and DI- is normalized (to a range between 0 and 100), and the Collatz 3x+1 theory is applied to generate a sequence of numbers. Each number in this sequence represents a simplified model of price movements. A specific step of this sequence (e.g., the 4th step) is selected to calculate a value that abstractly represents price behavior. RSI and Signal Generation:
RSI is calculated based on the selected step from the Collatz sequence. When RSI reaches certain levels (e.g., 10) and depending on the direction of the closing prices, the first group of signals is generated (indicating whether the trend is likely to continue or reverse). Pullback Levels and Collatz Average:
Based on the generated signals, pullback levels are identified for long and short positions. These levels are averaged to calculate a new reference level called the "Collatz Level," which serves as a midpoint for analyzing price movements. Subsequent Signals:
The system generates a second group of signals depending on whether the price crosses above or below the Collatz Level. These signals trigger buy or sell positions based on market conditions. Visualization:
The signals are visualized on the chart using specific shapes and colors (e.g., upward triangles indicate buy signals, downward triangles indicate sell signals). Overall Objective: This system aims to produce comprehensive and creative trading signals by evaluating price movements through both a mathematical model (Collatz theory) and technical analysis tools.