Volatility-Regime Mean Reversion Hybrid

Family: trend_following · Regime: trending · Complexity: medium · Asset classes: Equities, Forex, Crypto · Timeframes: H1, H4, D1

Thesis

Markets exhibit inertia when price breaks out of a historical High/Low channel, but these moves are prone to short-term mean-reversion. By waiting for a 3-period Stochastic exhaustion and a single directional candle (V7 Corpus) to confirm the trend's resumption, we can enter with a tighter volatility-based stop (TopTrend) than standard trend-following systems, improving the risk-to-reward ratio.

Components

• Trend Bars (regime) — Filters for high-probability environments by ensuring price is trading outside a significant moving average corridor of highs/lows.
• Extrem SuperTrend (direction) — Provides a medium-term directional bias and confirms that volatility is expanding in the direction of the regime.
• V7 Corpus-Local-AlertCondition-v1 (entry) — Provides the final tactical trigger by identifying a candle closing in the desired direction, signaling momentum resumption.
• Chandelier Exit (exit) — A classic volatility-based trailing stop to capture the meat of the trend while exiting during significant volatility reversals.
• TopTrend (BBands Stop) (risk) — Uses volatility-adjusted bands to set initial stop-loss levels and provide a risk-defined foundation for position sizing.
• Stochastic Oscillator (Stoch) (confirmation) — Acts as a timing mechanism to ensure entry occurs after a short-term pullback (mean reversion) within the broader trend.

Known failure conditions

• Price remains trapped within the 100-period MA High/Low channel for extended periods.
• Consecutive Stochastic signals trigger entries into a 'melt-up' or 'melt-down' where the 3-period timing is too noisy.
• Average True Range (ATR) collapses to multi-month lows, rendering volatility-based stops (Chandelier/TopTrend) too tight.

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