Mean Bias Momentum Breakout

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

Thesis

Market participants exhibit directional bias that can be measured via Mean Error. When this bias aligns with a momentum shift (CCI zero-cross) and a structural breakout (Donchian Midline), the probability of a sustained move increases. By using Elliott Wave pivots for risk and Jurik Envelopes for exits, we can dynamically adapt to changing volatility cycles.

Components

• Mean Error (ME) (regime) — Acts as a regime filter to ensure the current price 'prediction' (directional bias) is positive for longs and negative for shorts, ensuring we trade in the direction of the mean bias.
• CCI Arrows (direction) — Provides the primary directional bias when the Commodity Channel Index crosses the zero-line.
• Donchian Channels (DC) (entry) — Defines the entry trigger; entry only occurs when price breaks the Donchian midline (Basis) in the direction of the bias.
• Jurik Adaptive Envelope Bands (exit) — Provides a dynamic, volatility-adjusted exit target that adapts to market noise levels.
• Elliott Wave [LuxAlgo] (risk) — Used to define risk boundaries by placing stops at the most recent significant Elliott Wave pivot (e.g., Wave 2 or Wave 4 lows).
• Average Force (confirmation) — Confirms that price is situated in the upper/lower half of its recent range with sufficient momentum to sustain a move.

Known failure conditions

• Mean Error stays near zero for extended periods, rendering the regime filter useless.
• Elliott Wave pivots fail to update during rapid price shocks, leading to 'stuck' stop-loss levels.
• Jurik Envelopes contract so tightly in low-volatility regimes that transaction costs exceed the potential gain.

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