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AUDUSD Linear Regression Range Reversion Strategy

Required membership: Free (Activate the plan here)

Type: Breakout

TimeFrame: H1

Please register to download the strategy

Profit factor 1.38

Instrument: Forex

Supported platforms: MetaTrader 4, MetaTrader 5, StrategyQuant

Strategy description

This is the first strategy in a new series of systems generated with a strict focus on the most recent decade of market behavior. Built for AUDUSD on H1, it is designed to exploit current volatility conditions and recurrent market patterns that repeatedly appear in this pair.

After the initial build, the strategy went through multiple out-of-sample (OOS) validations and a dedicated TRUE OOStest to reduce overfitting risk and confirm that the underlying logic remains stable beyond the development sample.

Core logic

The strategy looks for price extremes using Bollinger Bands:

  • Long setup: the Open two bars ago is below the Lower Bollinger Band (BB period 50, deviation 2.4, PRICE_CLOSE).
  • Short setup: the Open two bars ago is above the Upper Bollinger Band (same settings).

Instead of entering at market, it places pending STOP orders at dynamic levels derived from:

  • Linear Regression (period 17) as a directional/mean reference,
  • plus/minus a range component (SmallestRange/BiggestRange period 68) to adapt entry distance to recent market structure.

Entries

  • LONG: place a buy stop atLinReg[1] + SmallestRange[2]
  • SHORT: place a sell stop atLinReg[1] – BiggestRange[2]

Pending orders remain valid for 36 bars. Duplicate trades are disabled, while replacing existing pending orders is allowed.

Risk management & exits

  • Stop-loss: 1.9 × ATR(35) (volatility-based)
  • Profit target: 5.6%
  • Time-based exit: close the position after 14 bars (stabilizes holding time and reduces tail risk)
  • Friday risk control: forced exit on Friday at 19:00 to reduce weekend gap exposure

Who this strategy is for

If you want an AUDUSD system that:

  • adapts to volatility (ATR-based SL + range-informed entries),
  • combines extremes (Bollinger Bands) with structure (linear regression),
  • and enforces disciplined exits (time-based + Friday cutoff),

this is a clean, pattern-driven approach aimed at capturing repeatable behavior in the current volatility regime.

Key settings (quick recap)

  • Symbol / TF: AUDUSD / H1
  • Backtest window: 2015-01-02 to 2025-08-22
  • Bollinger Bands: period 50, deviation 2.4
  • Linear Regression: 17
  • Range period: 68
  • ATR for SL: 35
  • SL: 1.9×ATR(35)
  • PT: 5.6%
  • Exit: after 14 bars, Friday 19:00

https://youtu.be/re1fxkCPddA
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