The popular strategy “Cornflower” involves opening deals at a time when the trend moves in one direction at different time intervals. Several moving averages are plotted on the hourly chart of any currency pair, in different colors: 8 EMA, 12 EMA, 24 EMA, 72EMA.
For this strategy, it is better to use hourly and 30-minute charts, as this is a more aggressive and accurate trading method. Short timeframes give a lot of inaccurate signals, and long ones are often late.
The principle of trading according to the “Cornflower” strategy:
The 24 EMA indicates the daily trend on the hourly price chart. The 8EMA moving average indicates the current day. It also often acts as a support level during a strong trend.
Periodically, a continuous trend will return to this area. At this point, a lot of money is accumulated for a further price spurt, thanks to which it becomes possible to sell or buy at favorable prices with a given pullback. The present trend in the market is determined by the exponential moving average with a period of 72.
Above the average of the 72 EMAs of the remaining 8, 12, and 24 EMAs, it indicates that the phase of a bullish trend is now in progress, so no sell deals can be made!
Signals that are opposite to these rules are related to a bearish trend.
There are 2 ways to open positions for this strategy:
1) Opening a position on a rollback – a conservative approach to the hourly chart:
– Averages with a period of 8, 12, and 24 are located above the average 72 EMA (buy) or below it (sell).
– The price has rolled back to the average 12 or 24 EMA.
2) Initial or progressive approach – opening a trade on a 30 minute chart.
-The price has broken through the average 72 EMA. The candlestick needs to close above the average when buying or below the average when selling.
– Averages 8, 12, and 24 EMA are in the direction of the trend. If the average with a period of 8 is above 12 and above 24, then a buy is made, and if the average with a period of 24 is above 12 and above 8, a sale is made).
Stop-loss is recommended to be placed behind the key Fibonacci levels (38.2% or 61.8%), and it can also be placed behind the EMA 72. The expediency of the upcoming transaction itself should be taken into account. take profit should be at least two or three times higher than stop loss.