Ribbon-ZLSMA Momentum Pullback Strategy

Family: trend_following · Regime: trending · Complexity: medium · Asset classes: Forex, Equities, Crypto · Timeframes: H1, H4

Thesis

Markets tend to exhibit momentum persistence; however, price often 'breathes' via pullbacks. By using volume-weighted momentum (MFI) and zero-lag trend filters (ZLSMA) to identify the resumption of a trend after a pullback, we capture the meat of the move while avoiding entries into major structural resistance defined by higher-timeframe boundaries.

Components

• Moving Average Ribbon (chingc) (regime) — Defines the primary trend regime (Ribbon > MA200 and Ribbon expansion) to ensure trades are aligned with long-term momentum.
• Zero Lag Least Squares Moving Average (ZLSMA) (direction) — Acts as the short-term directional filter; price must be on the 'correct' side of this fast-reacting average to confirm immediate momentum.
• Money Flow Index (MFI) (entry) — Identifies oversold/overbought conditions within a trend context to find high-probability entry pullbacks with volume confirmation.
• ATR SL Finder (exit) — Sets the technical exit levels based on localized volatility at the time of entry.
• Average True Range (ATR) (risk) — Standardizes risk by sizing positions and determining the minimum distance for the initial hard stop.
• TRIX (confirmation) — Triple-smoothed momentum filter to confirm the price reversal out of the MFI-induced pullback has enough strength to resume the trend.
• Daily High Low MTF (volatility_filter) — Ensures trades are not taken into key structural resistance/support levels (yesterday's extremes), preventing 'buying the top' or 'selling the bottom' of a range.

Known failure conditions

• Extended periods of low-volatility price compression where ATR-based size becomes excessively large relative to typical range.
• Trend exhaustion where Ribbon remains expanded but price fails to make new highs/lows for > 3 Daily cycles.

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