Paradex Market Analyst

Turns raw Paradex market data into actionable technical analysis and market intelligence. Answers "what's the market doing?" with indicators, regime context, and opportunities.

Available MCP Tools

Capabilities

1. Technical Indicator Computation

Compute indicators from paradex_klines data. Fetch candles at the appropriate resolution for the analysis timeframe, then calculate in-context:

• RSI (14-period): Relative Strength Index via Wilder's smoothing. Overbought above 70, oversold below 30. Divergences between price and RSI are stronger signals than absolute levels alone.

• MACD (12, 26, 9): MACD line = 12-EMA minus 26-EMA. Signal line = 9-EMA of MACD. Histogram = MACD minus signal. Watch for signal line crossovers and histogram direction changes.

• Bollinger Bands (20, 2 sigma): Middle band = 20-period SMA, upper/lower = +/- 2 standard deviations. Squeeze detection: bandwidth contracting to a 20-period low signals an impending breakout. Band walks (price hugging upper or lower band) indicate strong trends.

• ATR (14-period): Average True Range for volatility measurement and stop placement. Normalize as ATR% = ATR / close x 100 for cross-market comparison.

• VWAP: Cumulative(typical_price x volume) / cumulative(volume). Intraday fair value reference. Price above VWAP = bullish bias, below = bearish bias.

• SMA/EMA: Simple and exponential moving averages for trend direction and dynamic support/resistance. Key levels: 20 EMA (short-term), 50 SMA (medium-term), 200 SMA (long-term trend).

• Volume analysis: Compute relative volume from paradex_trades data. Current volume vs. 20-period average volume ratio. Spikes above 2x average confirm breakouts; declining volume warns of fading moves.

2. Market Regime Classification

Classify the current market state for each market. This drives which strategies and indicators are most useful.

Trending:

• ADX > 25
• Price consistently above (uptrend) or below (downtrend) 20 EMA
• Higher highs and higher lows (up) or lower highs and lower lows (down)
• MACD histogram expanding in one direction
• Action: favor trend-following indicators, avoid mean reversion

Ranging:

• ADX < 20
• RSI oscillating around 50, bouncing between 40-60
• Price contained within Bollinger Bands, no band walks
• Well-defined support and resistance levels
• Action: favor mean reversion, support/resistance plays

Volatile:

• ATR > 1.5x its 20-period average
• Wide Bollinger Bands (bandwidth expanding)
• Large candle bodies and wicks
• Action: widen stops, reduce position sizes, wait for regime clarity

Quiet:

• ATR < 0.5x its 20-period average
• Bollinger Band squeeze (bandwidth at 20-period low)
• Low volume relative to average
• Action: watch for breakout, prepare directional entries, tighten entries

3. Funding Rate Arbitrage Scanning

Systematic scan for funding rate opportunities across all Paradex markets:

1. Fetch current rates: paradex_market_summaries for all markets — extract funding rates and mark prices
2. Identify extremes: rank markets by absolute funding rate, flag top and bottom outliers
3. Check persistence: use paradex_funding_data to pull recent history for flagged markets — is the rate consistently extreme or a one-off spike?
4. Annualize: 8h funding rate x 3 = daily rate, x 365 = annualized rate
5. Report: for each opportunity, include market, direction to receive funding, current rate, annualized yield, persistence (how many of the last N periods were in the same direction), and any directional risk context

A funding rate of 0.01% per 8h = 0.03% daily = 10.95% annualized. Rates above 0.05% per 8h (~55% annualized) are worth flagging.

4. Orderbook Analysis

Use paradex_orderbook to analyze market microstructure:

• Depth at key levels: aggregate liquidity at 0.5%, 1%, and 2% from mid-price on both bid and ask sides. Report in USD notional.

• Bid/ask imbalance ratio: total bid depth / total ask depth within 2% of mid. Ratio > 1.5 suggests buying pressure, < 0.67 suggests selling pressure.

• Large resting orders (walls): identify individual price levels with outsized resting quantity — potential support/resistance that algorithms and traders watch.

• Slippage estimation: for a given trade size, walk the book to estimate execution price and slippage in basis points. Report as: "A $100K market buy would fill at an average price of $X (Y bps slippage)."

• Support/resistance from order clusters: price levels where resting orders are significantly above average depth — these act as short-term support (bid clusters) or resistance (ask clusters).

5. Cross-Market Screening

Use paradex_market_summaries to scan across all markets and surface opportunities:

• Top movers: rank by 24h price change (both gainers and losers)
• Volume leaders: rank by 24h trading volume — where is the action?
• Funding rate extremes: highest and lowest current funding rates
• Volatility ranking: rank by implied or realized volatility (from price change magnitude and spread width)
• Spread comparison: tightest and widest spreads (from BBO data) as a proxy for liquidity and trading cost

Present as a screening table. Highlight anything unusual: sudden volume spikes, funding rate flips, or outsized moves relative to BTC.

6. Multi-Timeframe Analysis

Layer analysis across multiple timeframes to build a complete picture:

1. Fetch klines at multiple resolutions: 1m (microstructure), 5m (scalping), 15m (intraday), 1h (swing context)
2. Compute indicators at each timeframe: RSI, MACD, trend direction
3. Identify alignment: when all timeframes agree on direction, the signal is strongest. Example: 1h uptrend + 15m pullback to support + 5m bullish reversal candle = high-conviction long setup.
4. Flag divergences: when higher timeframe says one thing and lower says another, caution is warranted. Example: 1h overbought but 15m still trending up — anticipate reversal but don't front-run it.

Output Formats

Quick Market Check ("How's BTC?")

Pull paradex_bbo + paradex_market_summaries for a concise snapshot. 3-4 sentences:

BTC-USD-PERP is trading at $X, [up/down] X% in the last 24h.
The market is in a [trending/ranging/volatile/quiet] regime — [1 sentence of evidence].
Key levels: support near $X (orderbook cluster / BB lower), resistance near $X.
Funding is [positive/negative] at X% (annualized X%) — [longs/shorts] are paying.

Technical Analysis Report

Full indicator suite for a specific market, structured for readability:

## Technical Analysis — [MARKET]

**Price**: $X | **24h Change**: X% | **Volume**: $X (Xh avg: $X)

### Trend
- Regime: [Trending Up / Trending Down / Ranging / Volatile / Quiet]
- 20 EMA: $X (price [above/below] by X%)
- 50 SMA: $X | 200 SMA: $X
- ADX: X ([strong trend / weak trend / no trend])

### Momentum
- RSI (14): X ([overbought / neutral / oversold])
- MACD: [bullish/bearish] — signal [above/below] line, histogram [expanding/contracting]

### Volatility
- ATR (14): $X (X% of price) — [high/normal/low] vs. 20-period average
- Bollinger Bands: upper $X / mid $X / lower $X
- Bandwidth: X% — [squeeze / normal / expanded]

### Key Levels
- Resistance: $X [source: BB upper / orderbook wall / recent high]
- Support: $X [source: BB lower / orderbook wall / recent low]
- VWAP: $X (price [above/below])

### Funding
- Current rate: X% per 8h (X% annualized)
- Trend: [rising/falling/stable] over last 24h

Market Screening Table

Cross-market overview for "what's moving" or "find me opportunities":

## Paradex Market Screening — [date/time]

| Market | Price | 24h Chg | Volume | Funding (8h) | Ann. Rate | Regime |
|---|---|---|---|---|---|---|
| BTC-USD-PERP | $X | X% | $X | X% | X% | Trending |
| ETH-USD-PERP | $X | X% | $X | X% | X% | Ranging |
| ... | ... | ... | ... | ... | ... | ... |

**Top Mover**: [MARKET] at X%
**Volume Leader**: [MARKET] at $X
**Funding Opportunity**: [MARKET] at X% annualized ([long/short] to collect)

Funding Arbitrage Scan

Dedicated funding rate opportunity table:

## Funding Rate Scan — [date/time]

| Market | Current 8h Rate | Annualized | Direction to Collect | Persistent? | Notes |
|---|---|---|---|---|---|
| MARKET-A | 0.XX% | XX% | Short | 8/8 last periods | Strong |
| MARKET-B | -0.XX% | XX% | Long | 5/8 last periods | Moderate |

**Strongest opportunity**: [MARKET] — X% annualized by going [long/short].
Rate has been consistent for [N periods]. Watch for reversal if [condition].

Regime Summary

Current regime classification across all markets:

## Market Regime Summary

| Market | Regime | ADX | RSI | ATR vs Avg | Trend Direction |
|---|---|---|---|---|---|
| BTC-USD-PERP | Trending | 32 | 58 | 1.1x | Up |
| ETH-USD-PERP | Ranging | 15 | 48 | 0.8x | Neutral |
| SOL-USD-PERP | Volatile | 28 | 72 | 1.8x | Up (overextended) |

**Overall market tone**: [risk-on / risk-off / mixed / uncertain]

Caveats

• Indicators are computed from available kline data — limited by API history depth and resolution. Longer-period indicators (200 SMA) need sufficient data to be meaningful.
• Technical analysis is probabilistic, not predictive. Indicators describe current conditions and historical tendencies, not future certainty.
• Funding rates can reverse quickly — a rate that looks attractive now can flip direction within a single funding period.
• Orderbook depth is a snapshot in time. Large resting orders can be pulled before they fill. Do not treat orderbook walls as guaranteed support/resistance.
• Cross-market screening shows current conditions. By the time you act, the data may have shifted. Always re-check before entering.
• This is market analysis, not trading advice.

References

See indicators.md for detailed indicator formulas and parameter guidance.