Pullback to a rising average
Trend following · Difficulty: Beginner
The idea
In an established uptrend, price often dips back toward a rising average before continuing. Rather than chase a high, wait for the dip and enter when the move resumes.
Indicators and settings
EMA 50 as the trend line, SMA 20 for the dip level, RSI 14 and ATR 14 for confirmation and stop distance.
Entry rule
Trend filter: the 50 EMA is rising and price has been above it. Wait for price to dip to or near the 20 SMA, then consider entering when a candle closes above the previous candle's high. RSI turning up from below 50 adds confirmation.
Exit rule
Target the previous swing high, or about 2 times your risk. Exit early if price closes clearly below the 50 EMA.
Stop-loss and risk rule
Stop below the pullback low, at least 1 × ATR away from entry. Risk 1% or less of the account.
Best conditions
Steady trends with shallow, orderly dips.
Pitfalls
- A pullback can become a full reversal.
- Buying the first touch without a trigger candle is a common beginner error.
- Gaps over the weekend can jump past your stop.
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Illustration only; ignores slippage, tax and most costs. Not financial advice.