@martyf, you actually have nailed it pretty well.
In technical analysis, there are two major classes of indicators:
1. Momentum indicators (like MACD) that hop in on existing moves. These are typically great in trending markets but bad in sideways markets.
2. Reversal indicators (that issue overbought/oversold) that counter existing moves. These are typically great in range-bound or slowly decaying markets.
Over the last couple of years (2018 through now) price movement has fallen much more into the 2nd category. As the ML continues to look at “what works,” it’s leaning toward that 2nd type of behavior–counter trading.
Our system is designed to be flexible enough to recognize the large pattern and move between these modes as appropriate, but clearly it didn’t happen fast enough to catch this rally.
A couple of fixes we’re working:
1. Identifying additional data points to help identify these changes. That may be looking at more complex trade setups.
2. Continuing to feed new data into the learning process. So whereas coming into this, a strong trending market was a distant memory, now it’s upfront and strong for the ML to consider.
Does that make sense?