Strategy Guardrails/
Momentum Overheated
TL;DR
This guardrail invalidates setups if the Market Cipher B momentum waves are excessively extended at the time of entry, indicating a high probability of mean reversion rather than continuation.
✓ NORMAL MOMENTUM
✗ MOMENTUM OVERHEATED
How It Works
- 1
Wave Extension: Price might reach a valid POI, but if the momentum oscillator is printing a 'fat wave' far beyond historical norms (amplitude exceeding ±70 on MCB), the move is exhausted.
- 2
Mean Reversion Risk: Entering a trend continuation trade when momentum is already maxed out exposes the trader to sharp, sudden pullbacks.
- 3
Action: If the Overheated threshold is breached, the execution is blocked until the oscillator cools off or resets.
LiquidMind measures the amplitude and thickness of the momentum wave. If the area under the curve indicates an unsustainable push, the system assumes the 'rubber band is stretched too far' and refuses to enter, gracefully waiting for the inevitable pullback.