11# Cornflower Trading System
Submit by Forexstrategiesresources
Construct a template according to the following settings:
8 EMA (yellow, dotted)
12 EMA (violet)
24 EMA (cornflower blue, hence the name)
72 EMA (khaki)
Apply to H1 (conservative) or M30 (aggressive) chart only and remove the grid
Cornflower is based on the principle that trades should be taken when the
EMA obviously defines the daily trend. The 8 EMA, which is one-third the
length, shows the intraday velocity of “fast” money. A 12 EMA shows the trend
of the last half-day. Its value is a place at which price will typically find
support when there is a dominant trend. To a lesser extent, this also applies to
the 24 EMA. A long-term trend will sometimes catch a breather around this
area, with big money accumulating on the opportunity to buy or sell at a
substantial discount. Finally, the 72 EMA defines the dominant trend in the
market. This trend will reassert itself as cumulative memory persuades traders
to resume trading in its direction. If the three shorter-term averages are above
the 72 EMA, we are in an uptrend and should not go short. The same applies in
reverse for a downtrend.
Cornflower can be used in a number of ways by all kinds of traders. When price
pulls back to the area between the 12 and 24 EMAs, the opportunity for a shortto
medium-term bounce presents itself. We can enter and set a profit target
based on a number of criteria, be they support and resistance areas, pivot
points, or a set pip amount. Or we can enter a longer-term trade, perhaps
exiting when the 12 EMA crosses down below the 24 EMA. The longer-term
setups in this system are powerful and can yield hundreds of pips on a single
trade that will last for up to two weeks. Cornflower will catch every major
move in the market, providing multiple opportunities to take advantage of a
big trend and pretend that one is a bank trader.
Basic System Rules
There are two kinds of entries using this system: pullback (conservative) and
initial (aggressive). The pullback entry, which is the heart of this system,
enters the market when conditions are quiet and after price has settled into
the area between the 8 and 24 EMAs. The timing of this entry can either be
mechanical (using either the 12 or 24 EMA) or discretionary in accordance with
the trader’s judgment on whether price is moving back in the direction of the
The initial entry aims to capitalize on the first movement of a new trend,
defined by a thrust beyond the 72 EMA that is confirmed by a turnaround in the
shorter EMAs. It is more risky because there is always the possibility of a
reversal. For this reason, it is probably better to use the M30 chart for this type
of entry. Moved up by 30 minutes, one has the opportunity to take a small
profit or scratch a trade at or near break-even if a reversal presents itself.
Only the H1 and M30 charts should be used with the Cornflower template.
Shorter time periods will lead to whipsaws, whereas longer time periods lag
behind the market too much.
The following rules are valid no matter the time of day. The quiet of the Asian
session actually provides some excellent opportunities for entry, which is a
boon for the trader whose day job makes watching the market during London
or New York an impossibility.
Pullback (conservative) entry – use hourly chart
8, 12, and 24 EMAs are all above (long) or below (short) the 72 EMA
more shallow the pullback.
Enter for 20 pips, or hold depending on trader’s judgment of the strength of the trend.
Initial (aggressive) entry – use M30 chart with identical indicators
Price has moved with authority above or below the 72 EMA. By “moved with
8, 12, 24 EMAs are all pointed in the direction of price, and preferably already
stacked in a perfect order (8 over 12 over 24 for long, 24 over 12 over 8 for
Enter for 20 pips and hold if the thrust develops into a real trend.
Using hourly and half-hourly charts, 20 pips is a realistic initial profit target,
especially if one is trading GBPUSD, GBPJPY, or EURJPY. Even the other major
pairs should yield this much on a properly gauged signal. By “major,” I mean
EURUSD, USDCHF, AUDUSD, USDJPY, NZDUSD, and USDCAD. With the possible
exception of EURGBP, any pair that involves two of the seven major currencies
should be tradable with this system. Cornflower is particularly well-suited for
entering long positions on the yen crosses (carry trades).
Entries may be timed more precisely with a 5M timeframe.
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