Aroon-DSP Cyclical Momentum Hybrid

Family: hybrid · Regime: trending · Complexity: high · Asset classes: Forex, Equities · Timeframes: 1H, 4H

Thesis

The hypothesis is that sustainable trends are characterized by price remaining consistently above its median fair value (Linear Percentile) while exhibiting strong time-based directional bias (Aroon). By filtering these entries through a volatility ceiling (ATR SL Finder) and exiting via cyclical exhaustion (DSP), we can capture the core expansion phase of a trend while avoiding entry into overextended 'blow-off' tops. The edge lies in the intersection of micro-price stability and macro-trend strength.

Components

• Linear percentile single hole length 3 percentage 50 v1 (regime) — Acts as a high-frequency micro-regime filter, ensuring entry occurs only when price is on the 'correct' side of its immediate 3-bar median.
• Aroon (direction) — Identifies the establishment of a dominant trend direction based on the time elapsed since the recent 25-period high or low.
• Absolute Strength Histogram (ASH) (entry) — Provides the final execution trigger by measuring the normalized divergence between bullish and bearish momentum components.
• Ehlers Detrended Synthetic Price (DSP) (exit) — Identifies the exhaustion of the short-term cycle, providing an exit signal before the trend reverses or enters a deep pullback.
• Average True Range (Standard MQ4) (risk) — Used for calculating position size to normalize risk across different market volatility states.
• Unsupported ta.macd Fast Length (Test Case) (confirmation) — Acts as a secondary confirmation to ensure the medium-term momentum slope aligns with the Aroon trend, despite its technical implementation quirks.
• ATR SL Finder (volatility_filter) — Establishes dynamic structural boundaries to prevent entering trades at the extreme end of a volatility expansion.

Known failure conditions

• The Linear Percentile (3) returns consistent 'na' values during low-liquidity periods, preventing trade execution.
• Aroon Up and Aroon Down both stay below 70 for extended periods, indicating a total lack of trend.
• The strategy executes in a tight range where the DSP cycle period (40) is mismatched with the actual market noise cycle.

Explore the full interactive blueprint with parameter ranges and evidence on WOBR StrategyVerse, or generate this strategy as an MT4/MT5 Expert Advisor with QuantMogul AI Engine (free download).