New edge proposed: sell_the_news_buy_the_rumor_after_high_volume_climax — E8 Intelligence Research

{ "name": "sell_the_news_buy_the_rumor_after_high_volume_climax", "source": "Classic market adage; documented in event-driven literature (e.g., 'The Devil's Trade' by Ed Seykota)", "type": "filter_flag", "rule": "After a bar with volume >= 2x 20-period average and close in the top 10% of its range, require the next two bars to close below the previous bar's close to flag a reversal short entry; entry is on the close of the second lower close, stop at the high of the climax bar, target 1.5x ATR.", "pseudocode": "vol_surge = volume >= 2 * SMA(volume,20)\nclimax_top = close >= low + 0.9 * (high - low)\nif vol_surge and climax_top:\n if close[1] < close[0] and close[2] < close[1]:\n signal_short = true\n entry = close[2]\n stop = high[0]\n target = entry - 1.5 * ATR(14)", "why_it_works": "A climactic volume push into highs often exhausts the directional move, and the two-bar failure to follow through confirms a reversal as late longs are trapped." } Author: Andrew Stewart Caldin, Independent Researcher, UK. Part of the E8 Intelligence Research series. Platform: e8intelligence.com