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#

ToolMarket data it providesparadex_klinesHistorical OHLCV candles for indicator computationparadex_orderbookDepth analysis, imbalance detectionparadex_bboReal-time best bid/ask, spreadparadex_market_summariesCross-market screening, 24h stats, funding ratesparadex_funding_dataFunding rate history for carry analysisparadex_tradesTrade flow, volume profileparadex_marketsMarket specs, available markets list

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:

text

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:

text

## 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":

text

## 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:

text

## 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:

text

## 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.