SuperSmoother OB Momentum Divergence

Family: hybrid · Regime: trending · Complexity: medium · Asset classes: Forex, Indices, Crypto · Timeframes: 15m, 1h, 4h

Thesis

Market 'shocks' create persistent supply/demand imbalances (Order Blocks). By entering these zones only when confirmed by a low-lag trend filter and sustained momentum (persistence over 3 bars), we exploit institutional liquidity while using volatility-based risk adjustment to survive 'noise' spikes.

Components

• Ehlers SuperSmoother Filter (regime) — Used to define the trend regime with minimal lag; price must be on the correct side of this filter to permit entries.
• Minimal Fill Examples (direction) — Provides the directional bias; the fast SMA must be above the slow SMA for longs to ensure alignment with medium-term momentum.
• Sonarlab - Order Blocks (entry) — Identifies high-momentum zones (supply/demand). Re-entry into these zones provides the primary execution trigger.
• Bollinger Bands (Standard) (exit) — Used as a dynamic take-profit target; exiting when price reaches the outer band which signifies mean-reversion risk.
• Volatility Ratio (VR) (risk) — Scales the stop loss and position size based on current bar volatility relative to the historical average (ATR).
• Profile dynamic series history block miss (confirmation) — Acts as a persistence filter; ensures the current close is superior to the close from 3 bars ago to confirm momentum is not a single-bar outlier.
• Size Highs and Lows 2 (volatility_filter) — Filters for 'conviction' by ensuring the net delta of candle body sizes (maxDelta) is positive for longs and negative for shorts.

Known failure conditions

• The strategy will fail if the underlying asset enters a low-volatility 'sawtooth' pattern where Order Blocks are formed and mitigated instantly.
• Invalidated if the Volatility Ratio (VR) remains consistently > 2.5, indicating a regime of chaotic price action where ATR-based stops are unreliable.

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