Truncated Cyclical Expansion System

Family: hybrid · Regime: trending · Complexity: medium · Asset classes: Forex, Major Indices, Liquid Commodities · Timeframes: H1, H4

Thesis

Market trends are not linear but composed of dominant cyclical frequencies. By using the Truncated Bandpass Filter to isolate the 20-period cycle and requiring a structural breakout (Boxline) in the direction of the macro-trend (PSAR) during a momentum shift (STC), we enter trades at the point of maximum expansion probability. This hypothesis assumes that volatility compression (Boxline) preceding a cyclical upturn leads to higher-than-average trend persistence.

Components

• Ehlers Truncated Bandpass Filter (TBF) (regime) — Identifies the cyclical regime; entries are only permitted when the price is in the positive or negative phase of the dominant frequency band.
• Parabolic SAR (Standard) (direction) — Provides a directional filter to ensure cyclical entries align with the prevailing medium-term trend.
• Schaff Trend Cycle (STC) (entry) — Provides the final trigger by identifying momentum acceleration within the TBF-defined cyclical window.
• Chandelier Exit Heiken Ashi Variant (exit) — Provides a volatility-adjusted trailing stop that uses Heiken Ashi smoothing to reduce exit noise during trend corrections.
• Boxline (Range Breakout) (risk) — Defines market structure boundaries; stop loss is placed at the opposite side of the most recent consolidation box to link risk to volatility.

Known failure conditions

• Frequent zero-line crosses of the TBF indicating a 'white noise' market with no dominant cycle.
• STC remaining pinned at 0 or 100 for extended periods while price moves against the trend (divergence).
• Boxline ranges becoming excessively wide, making the Reward-to-Risk ratio unattractive.

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