Strategy · Continuation · EUR/USD · H1

Mean Reversion

Trends rarely move in a straight line. The entry is on the pullback.

Trends don't move in a straight line: they push, pause and pull back. Buying the pullback in an uptrend usually gives a better price and a tighter stop than buying the breakout.

This is the strategy we open in full for free: the EMA 20 and EMA 50 define the trend, and the entry comes when price returns to the average and shows signs of continuing.

When it works

In clean trends on EUR/USD and gold during London and New York. It fails in ranges, when the averages cross back and forth.

The setup

EMA 20 above EMA 50 to buy (below to sell).

Common mistakes

Trading it in a range where the EMAs keep crossing.
Buying the first touch without a confirmation candle.
Setting a target smaller than the risk.

The full rules

Market: EUR/USD and gold
Timeframe: H1
Session: London and New York

Condition: EMA 20 above EMA 50 to buy (below to sell).
Entry condition: Price pulls back into the area between the two averages and forms a rejection candle. The entry occurs when that candle breaks.
Stop: Beyond the low (or high) of the pullback.
Target: The last high (or low), at least 1.5R.
Risk: 0.5% to 1% of the account per trade.

Backtest

The backtest of this strategy is in progress. Its win rate, average R and longest losing streak will be published here once it is complete.

Backtest statistics, not a promise of future results. Every strategy goes through losing streaks. General educational rules, not a recommendation to trade any market at any given time.

The other strategies

Keep reading

The full rules

Market: EUR/USD and gold
Timeframe: H1
Session: London and New York

Condition: EMA 20 above EMA 50 to buy (below to sell).
Entry condition: Price pulls back into the area between the two averages and forms a rejection candle. The entry occurs when that candle breaks.
Stop: Beyond the low (or high) of the pullback.
Target: The last high (or low), at least 1.5R.
Risk: 0.5% to 1% of the account per trade.

Backtest

The backtest of this strategy is in progress. Its win rate, average R and longest losing streak will be published here once it is complete.

Backtest statistics, not a promise of future results. Every strategy goes through losing streaks. General educational rules, not a recommendation to trade any market at any given time.