20 EMA snapback
When price runs more than 3 ATRs away from its 20 EMA, it is stretched like a rubber band. The first candle that turns back is the signal to look for a return toward the average.
Watch it play out
Replay plays a setup this strategy already finished and stops so you can call it. Live watches for the next one on Bitcoin (BTC-USD, 1-minute candles). Either way a setup is marked only when a candle closes, then it's locked and plays out to its target or its stop. Nothing to trade here.
How the live chart applies the rules
- 1-minute candles. The chart runs every strategy on 1-minute Bitcoin candles from Coinbase, whatever timeframe the strategy page suggests. Times are New York time.
- Closed candles only. Levels, triggers and stops are read when a candle closes. Entry is that candle's close.
- One setup at a time. While a setup is playing out, the same strategy doesn't start another.
- Sensible risk only. A setup counts only if its stop is between a quarter and 6 times the average candle range (ATR 14) from entry (wider for session-range strategies), and its target is at least 0.75R away.
- How a setup ends. At its target or its stop. If one candle touches both, the stop counts. A setup also ends at any exit its page names, and after 120 candles (longer for trend and session strategies) if nothing is hit.
- Replays. A replay plays the latest setup this strategy finished on the live chart's recent history, sped up. It's the same setup the live chart confirmed, with the same entry, stop and result. If the strategy hasn't finished one recently, the replay uses example candles and says so.
- The trading day. A day runs 6:00 PM to 6:00 PM ET, like futures. VWAP restarts at 6:00 PM, and "yesterday" means the last full trading day.
How 20 EMA snapback works
- 1Where's the level?
- The 20 EMA, and price more than 3 ATRs away from it.
- 2What's the trigger?
- After the stretch, a candle closes back past the previous candle's low (after a run up) or high (after a run down).
- 3Where is it wrong?
- Beyond the extreme of the last 4 closed candles.
- 4Where does it end?
- The 20 EMA.
- Markets
- Futures, Stocks, Forex, Crypto
- Timeframes
- 1m to 15m
- Sessions
- Any liquid session
- Also called
- Rubber band trade, Mean reversion to the 20 EMA
What it means
When price runs more than 3 ATRs away from its 20 EMA, it is stretched like a rubber band. The first candle that turns back is the signal to look for a return toward the average.
How it is confirmed without repainting
The stretch is measured on the previous closed candle, and the turn must be a closed candle.
When it fails
News-driven moves that keep going. Stretched can get more stretched.
Education only. Prop Firm Duel does not provide trade signals or financial advice. This page explains how the strategy is commonly defined. Past results never guarantee future results.
More Mean reversion strategies
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Bollinger bands mark two standard deviations around a 20-period average. In a range, closes outside the band tend to snap back to the middle line.
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When the market opens away from yesterday's close, small gaps often get filled as price drifts back to the prior close.
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The Keltner channel sits 2 ATRs either side of the 20 EMA. A close outside it is stretched. When the next candle closes back inside, price often drifts back toward the middle.
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