VPCI-CG Cycle Confirmation Strategy

Family: hybrid · Regime: trending · Complexity: medium · Asset classes: FX, Equities · Timeframes: H1, H4

Thesis

The market exhibits 'Real' and 'Fake' moves; a real move is characterized by volume confirmation (VPCI) and a clean structural shift (FakeCandle). By entering when the internal cycle balance (Ehlers CG) shifts in the direction of the confirmed volume trend, we capture the meat of a move before momentum (MACD) exhausts. Risk is best managed by the median expected error (MdAE) rather than standard deviation, as it provides a more realistic 'noise floor' for stop-loss placement in non-normal price distributions.

Components

• Volume Price Confirmation Indicator (VPCI) (regime) — Acts as a regime filter to ensure that price action is backed by volume momentum, preventing entries in 'hollow' trends.
• FakeCandle (direction) — Provides the structural 'clean' price direction, filtering out minor price noise that doesn't represent a true shift in market bias.
• Ehlers Center of Gravity (CG) (entry) — Identifies the precise turning point in the cycle with minimal lag by calculating the price distribution balance.
• Connect MACD (Azullian) (exit) — Used for trend exhaustion exits; the MACD signal line crossover provides a reliable momentum-based exit signal.
• Median Absolute Error (risk) — Quantifies the current 'forecast error' or volatility around the open price to set a robust, outlier-resistant stop loss.

Known failure conditions

• Price remains in a low-volume sideways grind where VPCI fluctuates around zero.
• Market exhibits 'fat-tail' events where the MdAE (which ignores outliers) significantly underestimates the required stop distance.
• The instrument has a Point size that breaks the VPCI divisor logic, leading to flat-line regime signals.

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