Normalized Volatility Momentum Cascader
Family: trend_following · Regime: trending · Complexity: high · Asset classes: Forex (Majors), Indices (US500, NAS100), Crypto (BTC/ETH) · Timeframes: M15, H1
Thesis
Market momentum is most exploitable when price velocity (ASH) and trend conviction (RVI) align with higher-timeframe structural bias (SMC) within a period of statistically significant volatility expansion (Modern Ichimoku Cloud). By using ATR-normalized cloud thickness, the strategy filters 'false' trends that lack the institutional participation required to sustain a move beyond a simple mean reversion. The edge exists because price inertia tends to persist once these diverse filters align, though it inherently sacrifices early entry for higher confirmation.
Components
- Heiken Ashi (Standard MT5) (regime) — Filters micro-noise to ensure the core trend regime is stable before entry consideration.
- Modern Ichimoku Cloud [GBB] (direction) — Provides the directional bias and volatility filter via the ATR-normalized cloud thickness to avoid low-liquidity ranges.
- Absolute Strength Histogram (ASH) (entry) — Detects the specific momentum impulse required to trigger the entry, ensuring bulls/bears are gaining strength relative to the other.
- Relative Vigor Index (RVI) (exit) — Measures the decay of closing conviction; used to exit before the trend officially reverses.
- Parabolic SAR (risk) — Provides a dynamic, accelerating trailing stop that tightens as momentum increases, protecting unrealized gains.
- TF Bias Detector (SMC) (confirmation) — Ensures the entry aligns with the higher timeframe (H1) structural trend and RSI-based momentum.
Known failure conditions
- Successive stop-outs in high-volatility sideways markets where SAR dots flip frequently.
- Market regimes where ATR-normalized cloud thickness remains below 1.0 for extended periods, leading to zero trade activity.
- Large divergence between H1 Bias and M15 price action causing significant entry lag.
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