Ehlers-WaveTrend Cyclic Confluence
Family: hybrid · Regime: trending · Complexity: high · Asset classes: Equities, FX, Crypto · Timeframes: H1, H4
Thesis
Price trends are most tradable when aligned with the dominant market cycle and supported by institutional volume (POC reclaims). By using the Ehlers TBF to isolate the cycle and WaveTrend to verify structural alignment, we enter trades only when momentum (Stochastic/MOM) synchronizes with high-conviction structural pivots. The edge exists because retail traders often enter momentum trades without considering the underlying cyclic phase or higher-timeframe S/R constraints.
Components
- Ehlers Truncated Bandpass Filter (TBF) (regime) — Isolates the dominant cycle to ensure the strategy only trades when price is in a specific frequency phase, reducing 'sawtooth' losses in non-cyclic noise.
- SuperTrend (direction) — Provides the primary trend filter to ensure entries are aligned with the medium-term directional bias.
- Stochastic Oscillator (ta.stoch) (entry) — Acts as the tactical entry trigger by identifying momentum relative to the recent high-low range.
- ATR Projection (exit) — Sets dynamic profit targets and stop losses based on current market volatility.
- Daily High Low MTF (risk) — Uses previous day's extremes as a structural risk filter; long entries must be above the daily low to ensure we aren't buying into a breakdown.
- Momentum (MOM) (confirmation) — Confirms that the price velocity is expanding in the direction of the trade.
- WaveTrend v3 [WavesUnchained] (volatility_filter) — A composite filter requiring a minimum score of 3 to ensure trades occur only during high-conviction structural alignments (POC reclaims and volume spikes).
Known failure conditions
- If the TBF period consistently fails to match the actual market cycle length, resulting in phase shift errors.
- In low-volatility regimes where WaveTrend score never reaches 3.0, leading to zero trade frequency.
- Persistent sideways price action where SuperTrend 'whipsaws' frequently between long and short states.
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