An elegant, rule-based alternative approach to identifying high-probability reversal opportunities through volatility compression, momentum shifts, and low-trend confirmation.
LuminaFlow identifies moments when the market is coiling in low-volatility environments and waits for a clear momentum inflection confirmed by a low directional trend regime. This creates asymmetric opportunities with well-defined risk parameters.
Price touches lower Bollinger Band while RSI crosses above 30 in a low ADX environment
The system continuously monitors Bollinger Band width. A squeeze occurs when current width falls below 85% of the 20-bar average width. This identifies periods of market coiling and reduced participation.
RSI (14) must cross above the 30 level from below for long opportunities (or below 70 from above for shorts). This confirms the shift from extreme conditions back toward equilibrium.
ADX (14) below 25 ensures we are not fighting a strong directional trend. Mean-reversion setups perform best when directional conviction is weak.
| Parameter | Default Value | Description |
|---|---|---|
| Bollinger Bands Period | 20 | Length of the moving average and standard deviation calculation |
| Bollinger Bands Deviation | 2.0 | Number of standard deviations for upper and lower bands |
| RSI Period | 14 | Relative Strength Index lookback period |
| RSI Oversold / Overbought | 30 / 70 | Thresholds for momentum inflection signals |
| ADX Period & Threshold | 14 / 25 | Average Directional Index filter for low trend regime |
| ATR Period | 14 | Average True Range used for dynamic stops and targets |
| Stop Loss Multiplier | 1.5 × ATR | Distance of protective stop from entry price |
| Take Profit Multiplier | 2.5 × ATR | Primary profit target distance (risk-reward ≈ 1:1.67) |
| Risk per Opportunity | 1.0% | Percentage of account balance risked on each opportunity |
| Maximum Concurrent Opportunities | 3 | Maximum number of simultaneous open positions |
Trading financial instruments involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. The LuminaFlow system is provided for educational and research purposes only.
The strategies and code shared here have not been thoroughly backtested across all market regimes and asset classes. Users should conduct their own extensive backtesting and forward testing before deploying any automated system with real capital.
Always use proper position sizing and never risk more than you can afford to lose. Consider consulting with a licensed financial advisor. The developers and distributors of this material accept no liability for any losses incurred.