TMA-Fractal Centered Mean Reversion

Family: mean_reversion · Regime: ranging · Complexity: high · Asset classes: Forex (Majors) · Timeframes: H1, H4

Thesis

The strategy hypothesizes that price extremes outside a centered TMA band are temporary 'noise' that will revert once volume (A/D) and relative currency strength (Darwinex Index) align against the move. The edge lies in using the TMA as a 'synthetic future equilibrium' that price is mathematically pulled toward, while using non-repainting MACD and structural Fractals to time the actual reversal entry and manage risk.

Components

• TMA CG 2024 (Centered Moving Average) (regime) — Acts as the 'gravity' well; identifying when price is statistically extended from the centered equilibrium.
• Accumulation/Distribution (direction) — Filters price extensions by ensuring volume flow is diverging from the price trend, suggesting exhaustion.
• MACD (entry) — Provides the precise execution trigger when momentum begins to rotate back toward the TMA center.
• Donchian Channels (DC) (exit) — Used for trailing exits and dynamic profit taking based on recent price extremes.
• Open Source Fractal Model (risk) — Determines stop-loss placement based on Change in Sub-structure (CISD) and identifies HTF liquidity sweeps for risk validation.
• Darwinex Labs Currency Index (confirmation) — Confirms the move is driven by broad currency strength/weakness rather than a single pair anomaly.
• Bollinger Bands (volatility_filter) — Filters for high-volatility expansion periods to ensure the reversal has enough 'room' to move.

Known failure conditions

• Price stays pinned to TMA bands for extended periods during a strong fundamental trend (TMA drag).
• Currency Index remains flat while the specific pair trends, indicating the move is idiosyncratic and lacks broad support.
• Fractal CISD levels are breached immediately after entry, indicating a lack of structural support.

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