Momentum-Contraction Breakout (MCB) — Indicator

The Momentum-Contraction Breakout (MCB) indicator is designed by joan alcantara to identify high–probability bullish continuation setups based on the sequence Impulse → Contraction → Breakout.

This indicator detects stocks that:

Show early uptrend structure
The short-term EMA is above the mid-term EMA, which is above the long-term EMA, confirming momentum and trend alignment.

Enter a volatility contraction phase
Price forms a controlled pullback of 1–5 candles with decreasing true range and a tight price range, signaling reduced supply and absorption.

Break out with conviction
The breakout is validated when price closes above recent range highs, moves at least a defined % upward, and volume expands above its 20-period average.

When all conditions align, the indicator marks the breakout candle and allows alerts to be triggered.

What this indicator is useful for:

Finding momentum continuation setups early in trend development

Scanning watchlists for high-quality entries

Creating actionable trade alerts for swing and position trading

Supporting systematic setups based on volatility contraction theory

Best used on daily timeframes, but can be adapted to intraday charts when liquidity is sufficient.