Working with an AI analyst

Explanation

AI tools write fluent, confident text. They can describe a chart wrongly and still sound sure. They may misread an image, invent a number, or repeat a common pattern that does not fit this chart. A confident tone is not evidence.

The theme of the track is Question the AI. You use AI. You do not obey it.

The six error types. These are the error types used in Part 1. Each has an example of what the mistake looks like.

1. It misreads the trend. The AI names the wrong direction. Example: the AI says "a strong uptrend," but the chart shows lower highs and lower lows, and price sits below a falling moving average.
2. Volume doesn't back up the claim. The AI says a move is strong, but trading volume (the bars at the bottom) does not support it. Example: the AI says "a powerful breakout to a new high," but volume on the breakout week is the lowest in months. Strong moves usually come with rising volume.
3. Support or resistance is in the wrong place. The AI draws a floor (support) or ceiling (resistance) at the wrong level. Example: the AI calls a price "solid support," but price has cut through that level three times, or the line touches only one point and is placed in the middle of a range.
4. It misreads an indicator. The AI reads a tool the wrong way. Example: an RSI (relative strength index, a 0 to 100 gauge of recent strength) reads 78, and the AI calls it "oversold." Readings above about 70 are usually called overbought, and below about 30 oversold. Another example: the AI says "price is above its moving average," but the average line sits above the price.
5. It calls a pattern that isn't complete. The AI names a chart pattern that has not finished forming. Example: the AI says "head and shoulders, sell now," but the right shoulder is still forming and the neckline has not broken. A "double top" with only one peak is the same mistake.
6. The chart's scale misleads. The chart's axis makes a small move look huge, or a large move look small. Example: the vertical axis runs only from 98 to 102, and the AI says "violent crash." The fall is 2%. A cut-off axis, or mixing a regular scale with a log scale, can mislead the same way.

Note that RSI is not the same as relative strength. Relative strength compares an asset to the market. RSI is a gauge built from an asset's own recent gains and losses.

A checklist for verifying AI claims.

1. Turn the claim into a sentence you can test on the chart.
2. Read the axes. Check the scale, the start value, and the dates or labels.
3. Find the evidence on the chart with your own eyes. Point to it.
4. Check any number the AI gives. Do the arithmetic.
5. Ask whether the chart could show the opposite. Look for lower highs, repeated breaks, weak volume.
6. Check whether the claim is complete. Has the pattern finished? Has the event happened?
7. Ask the AI to show its working, then check that too.
8. Ask whether acting on the advice fits the client's mandate.
9. Decide. Write your reason in one sentence.

Free tools only. Any free AI tool, book, or website is allowed. No paid tool is needed, and none is rewarded. Your judgment decides.