TLB Grid-HS Structural Reversion

Family: mean_reversion · Regime: high_vol · Complexity: high · Asset classes: Forex, Equities, Crypto · Timeframes: H1, H4

Thesis

Market participants over-react to news, pushing price to statistical extremes (Grid High/Low). A reversal is tradable when the noise-filtered market structure (TLB) shifts and a geometric exhaustion pattern (HS) forms, indicating a cluster of stop-outs and a high-probability mean-reversion move toward the dynamic average.

Components

• Grid Bot [Grid range plugin] Two Moving Avarages [psyll] (regime) — Defines the volatility boundaries where the asset is expected to mean-revert or breakout; used to filter trades occurring outside of 'fair value' extremes.
• Three-Line Break (TLB) with MA (direction) — Filters out minor noise to establish the dominant medium-term directional bias through structural price breaks.
• HS Indicator (Head & Shoulders) (entry) — Identifies specific high-probability exhaustion/reversal patterns at the edges of the grid boundaries.
• ATR Heiken Ashi (exit) — Provides a smoothed volatility-based exit to capture trend extensions without being shaken out by minor spikes.
• ZigZag+ v5 (risk) — Used for objective Stop Loss placement at the most recent validated swing high/low and calculating position size based on recent market structure.

Known failure conditions

• Price perpetually grinds along the Grid boundaries without triggering a TLB reversal.
• HS pattern necklines are too horizontal, leading to 'flickering' entries in low-volatility environments.
• Market enters a 'micro-ranging' mode where ZigZag swings are smaller than the spread.

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