Understanding QARI's 11 signal layers

The 11 Layers Overview

QARI analyses every candidate trade across 11 independent signal layers. Each layer is a distinct analytical framework that asks a different question about market structure, momentum, or context. No single layer is sufficient to justify a trade. The engine aggregates all 11 into a weighted confidence score.

The layers are deliberately diverse. Some are structural (wave analysis, order blocks), some are flow-based (CVD, order book), some are sentiment (funding, OI), and some are contextual (session, BTC dominance). This diversity means that a strong signal in one layer that is contradicted by several others will score lower than a moderate signal confirmed across multiple layers.

L1Wave Structure

The market phase detector. Before any signal is valid, QARI determines whether the market is trending, ranging, or volatile.

• QARI maps the current price action to one of three regimes: TRENDING, RANGING, or VOLATILE.
• A trending market has higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend). Entries in the trend direction are preferred.
• A ranging market oscillates between a defined high and low. QARI looks for reversals at range extremes.
• A volatile market has erratic, unstructured price action. QARI reduces confidence scores in volatile regimes and raises entry thresholds.
• The regime classification feeds into the ATR gate in the pre-entry checks. If volatility is below 50% of the 30-day ATR median, the setup is rejected regardless of signal score.

L2Liquidity / SFP

A Swing Failure Pattern (SFP) occurs when price briefly spikes through a key swing high or low, then reverses sharply. It is one of the most reliable entry triggers in QARI's arsenal.

• Large players accumulate or distribute by hunting liquidity at obvious swing highs and lows. Retail traders cluster their stops at these levels.
• An SFP at a key level suggests that liquidity has been harvested and the large player now wants to move price in the opposite direction.
• QARI grades SFPs by the clarity of the previous swing, the depth of the wick, the volume on the spike, and the quality of the close back inside the range.
• Not every candle that pokes a level counts. QARI requires the close to be inside the structure, not just a touch-and-rebound.

L3Order Blocks & Fair Value Gaps

Order blocks are zones where institutional orders were placed in the past. Price tends to react when it returns to these zones. Fair Value Gaps (FVGs) are imbalances where the market moved so fast that little trading occurred.

• A bullish order block is the last bearish candle before a strong upward move. QARI identifies these zones and watches for price to return to them.
• A breaker block is an order block that has been violated and flipped. It acts as resistance on the way back up after a break of structure.
• Fair Value Gaps are three-candle patterns where the middle candle creates a gap between the wicks of candles 1 and 3. Price frequently returns to fill these gaps.
• QARI grades order blocks by: age (recent is better), displacement (strength of the move away), and whether the zone has been tested before (unmitigated is better).

L4Volume / CVD

Cumulative Volume Delta (CVD) tracks the net difference between buying and selling volume. QARI uses CVD to confirm whether a price move is backed by real order flow or is a fake-out.

• Raw volume tells you how much trading is happening. CVD tells you who is winning: buyers or sellers.
• A bullish CVD divergence occurs when price makes a lower low but CVD makes a higher low. Sellers are exhausted. This often precedes a reversal.
• QARI also evaluates the ATR (Average True Range) as a volatility gate. If the current ATR is below 50% of its 30-day median, the market is too quiet for reliable setup development.
• Volume profile analysis identifies high-volume nodes (HVNs) and low-volume nodes (LVNs). LVNs are thin air that price can move through quickly. HVNs act as support or resistance.

L5Funding Rates & Open Interest

Crypto perpetual futures have funding rates: periodic payments between longs and shorts. When funding is extremely positive, too many traders are long and a flush is likely.

• QARI uses funding rate data as a contrarian signal. High positive funding means the market is crowded long. A reversal to shake out those longs becomes more probable.
• Open Interest (OI) rising with price confirms genuine new buying. OI rising while price falls confirms new short positions being added.
• OI collapsing on a move often signals liquidations, not real directional flow. QARI is cautious about adding to positions after OI flush events.
• Funding and OI are particularly useful as L5 confirmation signals rather than standalone triggers. They improve confidence in setups already scoring well on L1-L4.

L6Fibonacci Golden Pocket

The Fibonacci retracement Golden Pocket (61.8% to 65.4% of a swing) is the most statistically reliable reversal zone in QARI's backtested data.

• When a trending market retraces, institutions often accumulate again at the 61.8% to 65.4% Fibonacci level of the previous impulse move.
• QARI calculates the Golden Pocket from the relevant swing high to swing low (or vice versa) on multiple timeframes.
• A setup that places the entry inside the Golden Pocket, combined with other layer confluences, scores significantly higher than the same setup without it.
• Extensions are also tracked: the 1.0, 1.618, and 2.618 Fibonacci extensions serve as profit target calibration references.

L7RSI Divergence / EMA / Bollinger Bands

Traditional indicators are used selectively in QARI, not as primary signals but as confluence confirmations that reduce false positives.

• RSI divergence: when price makes a lower low but RSI makes a higher low, buying pressure is building despite lower prices. This is a bullish divergence and adds score to long setups.
• EMA alignment: QARI checks whether price is above or below key EMAs (typically 20, 50, 200) and whether faster EMAs are crossing slower ones in the direction of the trade.
• Bollinger Band extremes: price touching or piercing the outer Bollinger Band in the context of a reversal setup adds evidence of overextension and mean reversion potential.
• None of these indicators alone are sufficient for a trade. All three must align to contribute meaningfully to the confluence score.

L8Order Book Dynamics

The live order book shows where buy and sell orders are resting. QARI scans for absorption walls and iceberg orders that indicate institutional interest.

• Bid absorption: a large bid that holds as price tests it multiple times, absorbing sell orders without moving lower. This signals a determined buyer at that level.
• Ask walls: conversely, a large offer that repeatedly caps upward moves may indicate a large seller distributing. QARI avoids long entries into obvious overhead supply.
• Iceberg detection: large orders that refresh after being partially filled. These are harder to see but QARI tracks the rate at which order book volume at a level replenishes.
• Order book signals are particularly valuable as short-term timing triggers and are weighted more heavily in the final pre-entry decision than in the medium-term structure score.

L9VWAP

The Volume-Weighted Average Price (VWAP) is the benchmark price that large institutions use. Price above VWAP signals bullish control; below signals bearish control.

• QARI tracks both daily and weekly VWAP. A reclaim of daily VWAP after a pullback is a bullish signal. A rejection at weekly VWAP during a downtrend confirms continued selling pressure.
• VWAP reclaims as an entry trigger: when price dips below VWAP, sweeps a low, then reclaims VWAP with strong volume, it represents a high-conviction reversal entry point.
• VWAP deviations: QARI also tracks standard deviation bands around VWAP. Price at ±2 standard deviations is statistically stretched and often reverts.
• The combination of an SFP at a key low with simultaneous VWAP reclaim is one of QARI's highest-scoring entry patterns.

L10Session Context

Not all trading hours are equal. The Asian session, London session, and New York session each have characteristic behaviours. QARI weights signals differently depending on which session is active.

• Asian session (00:00 - 08:00 UTC): typically lower volume, often sets up liquidity at session highs/lows that London will later sweep.
• London session (08:00 - 12:00 UTC): high-volume opening, frequently runs stops from Asian range before establishing the real direction.
• New York session (13:00 - 17:00 UTC): highest liquidity for most pairs. Confluence of NY and London (13:00-17:00 UTC overlap) is the highest-probability window.
• QARI applies a session weight modifier to confidence scores. A setup forming during low-volume Asian hours scores lower than the same setup forming at the London open.

L11BTC Dominance

Bitcoin Dominance (BTC.D) measures Bitcoin's market cap as a percentage of total crypto market cap. It is the primary macro filter for altcoin entries.

• Rising BTC dominance = capital rotating into BTC, usually away from altcoins. QARI reduces long confidence scores for altcoin entries when BTC.D is trending up.
• Falling BTC dominance = altcoin season, capital flowing from BTC into alts. QARI increases confidence scores for altcoin longs when BTC.D is trending down.
• QARI does not trade against BTC.D trend. If BTC.D is in a strong uptrend, no new altcoin long entries are taken regardless of how good the individual setup looks.
• BTC.D is a binary gate: it does not affect the score; it can block an otherwise eligible trade entirely if the macro environment is hostile.

How Layers Aggregate into a Score

Each of the 11 layers contributes a sub-score based on the strength and clarity of its signal for the current setup. These sub-scores are weighted and summed into a single confidence score from 0 to 100.

The weights are not fixed. QARI uses adaptive weights that shift based on the current market regime. In trending markets, wave structure and order blocks carry more weight. In ranging markets, SFP and VWAP signals carry more weight.

The Three-Point Confluence Rule

Even if a setup scores above 70, there is an additional hard rule: at least three specific high-quality signals must be present from the following list.

A setup needs at least three of these five. This rule exists because each of these signals individually can fire in random market noise. When three or more align at the same level, the probability that it is noise drops significantly.