Equilibrium / Reset Phase (ATR-Only Model)
(The Moment the Shock Cycle Fully Ends)
The Equilibrium / Reset Phase marks the point where the market completes its post-shock recovery and returns to a normal volatility regime. Unlike the earlier phases, which require multiple signals, the Reset Phase is governed entirely by ATR.
Everything else (BB width, RSI centering, MACD flattening, etc.) is just a visual consequence of ATR normalization — none of it provides independent information.
This phase is defined by one condition:
⭐ Condition:
ATR returns to its pre-shock baseline.
This is the moment where:
- The shock volatility spike has been fully absorbed
- Candle ranges have normalized
- The volatility surplus created by the cascade is gone
- Market microstructure has returned to its default steady state
This is the end of the shock sequence.
Why ATR Alone Is Sufficient
ATR is the direct measurement of volatility expansion and contraction.
When ATR spikes during a cascade, it reflects:
- panic range expansion
- order book displacement
- forced selling
- involuntary liquidity movements
When ATR decays back to baseline, it reflects:
- completion of the reversion
- dissipation of post-shock energy
- restoration of orderly trading
- return to low-variance price behavior
Every other indicator changes because ATR changed:
- BB width narrows because range contracts
- MACD flattens because momentum vanishes
- RSI centers because directional pressure disappears
These are derivatives of ATR behavior, not independent confirmations.
ATR normalization is the cause. Everything else is an effect.
What Equilibrium / Reset Means Structurally
When ATR returns to baseline:
1. The entire shock cycle is finished
The market is no longer processing the cascade’s effects.
2. Price action becomes structurally coherent again
Indicators regain their standard interpretive meaning.
3. Volatility returns to its default regime
The chaotic post-shock drift ends.
4. Buyer/seller pressure is balanced
No one side is mechanically forced into action.
5. The next move must come from a new source
—not from leftover shock inertia.
This is why the Reset Phase is not directional. It simply means the system is clean again.
Trading Implications (ATR-Only)
✓ If you stayed long after the shock-retracement, this is the absolute latest exit.
Optimal exit is VWAP. ATR-baseline exit is “you overstayed, but here’s the hard stop.”
✓ Do not assume continuation past this point.
Any trend that emerges afterward is a new event.
✓ Indicators become reliable again.
RSI, MACD, BBs, VWAP — all of them stop being distorted by high volatility.
✓ This phase tells you the edge from the shock is over.
There is no remaining statistical advantage from the cascade.
One-Sentence Summary
Equilibrium/Reset occurs when ATR returns to pre-shock baseline. This marks the complete end of the shock cycle and the return to normal volatility conditions.
So be careful not to stay too long! If the retracement is against the trend of higher timeframes then you are just asking to give up those gains!