Chart sentiment as a regime filter for hourly stochastic entries

A regime estimate, not a trade signal

The index of chart sentiment is constructed entirely from the price chart. It is presented as a direction and regime estimate, not as a standalone trade signal.

Editorial reading: use that index only to classify the regime, then keep or drop an hourly stochastic entry. Do not treat the index itself as the trigger.

Candlecode as the short-horizon input

Candlestick structure is used as the short-horizon sentiment input because each bar can be coded for bullish or bearish content from the full candle rather than from the close alone.

Candlecode is the numeric encoding of that bar. It assigns a degree of bullish or bearish structure from the full candlestick, not from the close alone.

The four-line sentiment map

A four-line overlay on the index defines the operating states. Two outer parallel extremes bound index highs and lows, and two inner parallels pass through intermediate turning points.

High is the state above the upper inner line. Low is the state below the lower inner line. The map is bullish when the index enters the inner band from below, and bearish when it enters from above.

Very high index readings are treated as overbought and very low readings as oversold. Movement from lower to higher levels is treated as a bullish regime in which upside legs are expected to exceed corrections.

Regime-filtered stochastic entries

Cross-stochastic is a rule-based hourly entry that fires when stochastic oscillators cross. Here it is the unfiltered baseline.

Regime-filtered entry is a two-stage procedure. First classify sentiment from the four-line sentiment map. Then open only those oscillator signals that match the regime, or require extra confirmation when the index is at an extreme.

In a high-index regime an hourly system may take both longs and shorts because sentiment is treated as unstable. In a definite bullish or bearish regime, entries are restricted to the direction of that regime.

When sentiment is high, both sides may be taken but longs are preferred and shorts need stronger confirmation. When sentiment is low, shorts are preferred and longs need stronger confirmation.

Where a slower trend overlay stands aside

The intended use of a slower trend overlay on an hourly reversal system is to stand aside when the two disagree. That overlay still waits for a mature trend and remains fragile when direction changes often.

Editorial note: the workflow in this article uses the four-line sentiment map as the stand-aside and direction gate, instead of waiting on that slower overlay.