Harmonic-Volume Momentum Hybrid

Family: hybrid · Regime: trending · Complexity: high · Asset classes: FX, Equities, Crypto · Timeframes: H1, H4, D1

Thesis

Sustainable market breakouts are characterized by momentum that is validated by volume accumulation (A/D) and contained within historical statistical error bounds (RAE). By filtering for these conditions and using structural pivots for risk, we capture the meat of a trend while exiting quickly when Heiken Ashi-smoothed volatility shifts.

Components

• Donchian Channels (DC) (regime) — Defines the trend regime; longs are only permitted when price is above the channel Basis (midpoint), ensuring we trade with the 20-period structural bias.
• Bulls Power (direction) — Ensures that buyers are actively pushing price above the 13-period EMA, filtering out weak rallies that lack underlying momentum.
• Absolute Strength Histogram (ASH) (entry) — Provides the final entry trigger by measuring the smoothed strength of price movement using the RSI mode to detect momentum shifts.
• Chandelier Exit (Heiken Ashi) (exit) — Acts as a trailing stop and hard exit; the Heiken Ashi smoothing reduces noise, but the aggressive multiplier ensures fast capital preservation on reversals.
• Custom Pattern Detection (risk) — Used specifically for risk management; the Stop Loss is anchored to the most recent structural pivot point (high/low) identified by the pattern algorithm.
• Accumulation/Distribution (A/D) Index (confirmation) — Confirms that the momentum is backed by volume; a rising A/D during a long entry suggests genuine accumulation rather than a low-volume squeeze.
• Relative Absolute Error (RAE) (volatility_filter) — Filters out trades where the price has deviated too far from its mean prediction (high error), preventing entries during parabolic exhaustion.

Known failure conditions

• Price remains stagnant within the DC Basis for extended periods (flat market).
• RAE stays consistently above 1.0, suggesting the baseline model is no longer relevant to current volatility.
• Extreme churn in the Chandelier Exit due to the low ATR multiplier (0.75).

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