The VCP strategy looks for a sequence of narrowing price ranges. As each range contracts, energy builds for a breakout. The system measures range size and waits for a break above the highest high or below the lowest low.
Once contraction is observed, a breakout beyond the recent extremes triggers a trade in that direction. Price crossing the moving average is used to manage exits.
This approach aims to capture explosive moves following a volatility squeeze.
- Entry Criteria: Range contraction then breakout of recent high/low.
- Long/Short: Both directions.
- Exit Criteria: Price crosses MA or stop.
- Stops: Yes.
- Default Values:
- MAPeriod = 20
- LookbackPeriod = 20
- CandleType = TimeSpan.FromMinutes(5)
- Filters:
- Category: Breakout
- Direction: Both
- Indicators: Range, MA
- Stops: Yes
- Complexity: Intermediate
- Timeframe: Intraday
- Seasonality: No
- Neural Networks: No
- Divergence: No
- Risk Level: Medium