Mid-Week Seasonal Liquidity Sweep Reversal

Family: mean_reversion · Regime: mixed · Complexity: medium · Asset classes: FX, Equities, Indices · Timeframes: 15M

Thesis

Intraday liquidity sweeps (stop hunts) occurring during the mid-week 'heart' of the market (Tue-Thu) are higher-probability reversal signals than those on Mondays or Fridays, as they represent the manipulation of established weekly volume. By confirming these sweeps with absolute momentum (ASH) and scaling risk with median candle error (MdAE), we can capture high-quality mean reversion moves while filtering out low-volatility noise and directional exhaustion.

Components

• Daily Seasonality (regime) — Used to isolate high-probability trading days (Tuesday-Thursday) where institutional liquidity sweeps are most likely to lead to sustained intraday trends.
• Supported indicator max boxes count (direction) — Serves as a baseline price-action verification tool to ensure the chart data is active and provides a simple 'close' price reference.
• Absolute Strength Histogram (ASH) (entry) — Provides the final momentum trigger after a liquidity sweep, ensuring the price is actually moving back in the desired direction.
• Relative Strength Index (Standard) (exit) — Identifies overextended momentum to exit positions before the reversal loses steam.
• Median Absolute Error (risk) — Provides a robust measure of candle volatility (Open-Close error) to dynamically scale stops and position sizes based on current market noise.
• Reversal Engine Score v1 (confirmation) — Identifies high-quality liquidity sweeps and market structure shifts that form the core structural edge.

Known failure conditions

• Hypothesis fails if the Daily Seasonality shows no statistical difference in win rate between Mondays and Wednesdays.
• Fails if liquidity sweeps are consistently followed by immediate further expansion rather than reversals (trend strength > sweep probability).
• Fails if MdAE remains static during high-volatility events, leading to under-protected stops.

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