POC Vacuum Mean Reversion Strategy

Family: mean_reversion · Regime: ranging · Complexity: medium · Asset classes: Equities, Forex, Crypto · Timeframes: 1H, 4H, D1

Thesis

Markets are most efficient at the Point of Control (POC) where volume is highest. When price moves away from this consensus on low relative volume (high Ease of Movement), it creates a liquidity imbalance. An RSI reversal in these 'stretched' zones identifies a high-probability mean-reversion trade back to the high-volume equilibrium.

Components

• Volume Profile + Pivot Levels [ChartPrime] (regime) — Establishes the 'Value Area' and Point of Control (POC). Acts as a regime filter where price is considered 'extended' if outside the primary volume clusters.
• Ease of Movement (EOM) (direction) — Confirms if price moves are occurring on low relative volume (high 'ease'), identifying 'liquidity vacuums' that are prone to filling back toward high-volume nodes.
• Relative Strength Index (RSI) (entry) — Provides the specific trigger when momentum begins to rotate back toward the volume-weighted equilibrium.
• SuperTrend (exit) — Acts as a trailing trend-stop and secondary momentum exit if the mean-reversion move transitions into a trending phase.
• Chandelier Exit Heiken Ashi Variant (risk) — Uses Heiken Ashi smoothed price action to set hard volatility-based stops, mitigating the noise of the RSI entry.

Known failure conditions

• Price remains in a low-volatility 'flat' state exactly at the POC for extended periods.
• Significant fundamental shifts (news) that create high-volume breakouts through POC, rendering historical volume clusters irrelevant.
• Volume Profile POC shifts frequently, indicating a lack of market consensus.

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