Technical Confluence & Gaussian Momentum Hybrid
Family: hybrid · Regime: trending · Complexity: high · Asset classes: Equities, Forex, Crypto · Timeframes: 1H, 4H, 1D
Thesis
Market participants exhibit 'herding' behavior when multiple technical and volume signals align. By using a 10-layer confluence engine (IAE) to define the regime and a low-lag Gaussian average (ALMA) to define the trend, we identify high-probability momentum windows (MACD). The edge exists because the entry requires structural, volume, and momentum confirmation, while the adaptive Laguerre RSI exits before traditional oscillators, capturing profit during peak momentum rather than waiting for price reversal.
Components
- IAE — Technical Confluence Score (regime) — Sets the 'investability' regime by requiring a minimum aggregate confluence of 10 technical layers before any trade is considered.
- Arnaud Legoux Moving Average (ALMA) (direction) — Filters the primary trend direction with low-lag Gaussian smoothing to ensure price has structural momentum.
- MACD (entry) — Acts as the tactical trigger, identifying momentum shifts when the MACD line crosses the signal line within an established trend.
- Laguerre RSI (exit) — Provides a smoother, adaptive exit signal to capture the core of a trend move before price exhaustion or mean reversion.
- ATR SL Finder (risk) — Provides a dynamic, volatility-adjusted floor (or ceiling) for risk management, ensuring stops are not hit by noise.
- Accumulation/Distribution (A/D) Index (confirmation) — Confirms that price movement is supported by volume flow, filtering out 'hollow' momentum moves.
- MIDPOINT: Rolling Midpoint (volatility_filter) — Ensures that the entry price is relatively favorable (above the midpoint for longs, below for shorts) within the recent volatility range.
Known failure conditions
- IAE score remains above 70 during a sustained price decline (logic gate failure).
- A/D divergence persists for more than 5 consecutive entry signals without a profitable outcome.
- ATR expansion exceeds 3x the 100-bar average, suggesting a transition to a high-volatility regime unsuitable for ALMA smoothing.
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