KCI Oscillator for Exhaustion and Mean-Reversion Signals

Summary

The KCI indicator combines four price-derived measures: average price velocity, deviation from a local moving average, rolling price dispersion, and the change in velocity. The document proposes normalizing each measure with a rolling Z-score and combining them into an oscillator intended to identify price exhaustion when movement decelerates and volume falls. It describes indicator buffers for the oscillator, buy and sell signals, and component values, plus an Expert Advisor workflow that reads signals on closed bars and uses dispersion to set volatility-scaled stop-loss and take-profit distances.

The material is primarily an implementation and design description; it provides formulas and sample integration logic but no backtest or performance evidence. Its stated caveats include reliance on tick volume in Forex and CFDs, where it reflects quote activity rather than traded liquidity, and the risk of repeated premature reversal signals during strong trends. It suggests adding a higher-timeframe trend filter. The article does not fully specify the signal thresholds or normalization and combination rules, so the proposed trading behavior may not be reproducible from the description alone.

Key ideas

• KCI combines velocity, distance from a moving average, price dispersion, and changes in velocity.
• The design applies rolling Z-score normalization before aggregating the component measures.
• Buy and sell signals are intended to be confirmed on closed bars to avoid intrabar changes.
• The example uses price dispersion to scale stop-loss and take-profit distances.
• The indicator may produce premature reversal signals in strong trends, and tick volume is only an activity proxy in Forex and CFDs.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.