Volumatic Centered Mean Reversion

Family: mean_reversion · Regime: ranging · Complexity: medium · Asset classes: FX, Equities, Crypto · Timeframes: H1, H4

Thesis

Price extremes are unsustainable when they occur at high-volume structural nodes. By using a centered moving average to identify 'fair value' extremes and Parabolic SAR to time the momentum shift, we can capture high-probability reversals as price returns to its volume-weighted mean.

Components

• TMA CG 2024 (Centered Moving Average) (regime) — Provides the 'fair value' channel; entries are only sought when price is at the outer standard deviation bands, signaling a potential mean-reversion regime.
• Parabolic SAR (Standard) (direction) — Acts as the momentum trigger to ensure that despite being at a TMA extreme, the price has actually begun to turn back toward the mean.
• Volumatic Support/Resistance Levels [BigBeluga] (entry) — Filters entries by requiring price to be interacting with a high-volume structural node, increasing the probability that the reversal has institutional backing.
• Relative Vigor Index (RVI) (exit) — Identifies momentum exhaustion for the exit signal, closing the trade when the closing price strength relative to the range begins to fade.
• Simple Panel Template (risk) — Provides the interface for fixed-risk calculation; used here as a structural constraint where SL is placed at the outer boundary of the Volumatic Level.

Known failure conditions

• Price 'hugs' the TMA outer bands for extended periods during high-volatility news events (volatility expansion).
• Low volume environments where Volumatic levels are narrow and easily pierced.
• Consistent RVI whipsaws in low-momentum environments leading to premature exits.

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