CG Cyclic Momentum Reversion

Family: hybrid · Regime: trending · Complexity: medium · Asset classes: Forex, Equities, Commodities · Timeframes: H1, H4

Thesis

Markets exhibit cyclic oscillations around a moving balance point. By using the Ehlers Center of Gravity to identify these balance points, we can exploit the tendency of price to revert to its mean when short-term momentum (Stochastic) is overextended but long-term momentum remains supportive. The edge exists because traders often overreact to cyclic swings, creating high-probability entry points when those swings align with the broader trend.

Components

• Indicator Base Template (regime) — Provides the data handling backbone and ensures calculation limits to maintain platform performance.
• Momentum Oscillator (direction) — Determines the primary trade bias (bullish/bearish) by comparing current price to past price.
• Ehlers Center of Gravity (CG) (entry) — Identifies the balance point of the current cycle to pinpoint the exact moment of mean-reversion.
• Bears Power (exit) — Measures the resurgence of selling pressure to trigger an early exit from long positions or the exhaustion of selling for short exits.
• TopTrend (BBands Stop) (risk) — Provides a volatility-adjusted trailing stop and defines the hard risk floor for position sizing.
• Stochastic Oscillator (confirmation) — Acts as a secondary filter to ensure entries occur at local exhaustion points (oversold/overbought).

Known failure conditions

• Persistent low-volatility 'flat' markets where TopTrend and CG produce overlapping signals.
• Strong parabolic trends that never return to the Stochastic or CG mean thresholds.

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