Ehlers SAK Elliott-HS Mean Reversion

Family: hybrid · Regime: trending · Complexity: high · Asset classes: FX, Equities (Intraday), Crypto (High Liquidity) · Timeframes: M15, H1

Thesis

The hypothesis is that market corrections (Elliott Waves 2/4/C) are fractal in nature and reach exhaustion when a specific frequency cycle (measured by SAK) aligns with a price-structure reversal pattern (H&S). By entering at this convergence and targeting the intraday Volume-Weighted Average Price (VWAP), we exploit the tendency for price to return to 'fair value' once a corrective cycle terminates.

Components

• Swiss Army Knife Indicator (SAK) (regime) — Uses the BandPass (BP) setting to isolate the dominant cycle frequency. A cross above zero indicates the start of a bullish cycle component, serving as a momentum-based regime filter.
• Elliott Wave [LuxAlgo] (direction) — Identifies macro-structure. Strategy looks for completion of corrective sequences (Wave C or Wave 4) to ensure the entry is in the direction of the primary motive trend.
• HS Indicator (Head & Shoulders) (entry) — Provides a precise price-action trigger. An Inverse H&S at the end of a bearish correction (Wave C) suggests structural exhaustion and high-probability reversal.
• Daily Volume-Weighted Average Price (VWAP) (exit) — Serves as the mean-reversion target. In an intraday context, price tends to gravitate back to the volume-weighted average after a corrective expansion.
• ATR SL Finder (risk) — Dynamically sets the floor/ceiling for the trade based on local volatility, ensuring the stop is outside the 'noise' detected by the SAK filter.

Known failure conditions

• Elliott Wave 4-1 overlap (Rule Violation) invalidates the motive sequence.
• SAK BandPass stays flat (zero-line) for > 10 bars, indicating a non-cyclical/dead market.
• VWAP gap at session open exceeding 2x ATR.

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