Last updated: 8 October 2026. Every screenshot below was recorded on 8 October 2026 on an IQ Option Practice account registered in Brazil, on EUR/USD 5-minute candles; the Chart analysis picture in Step 1 was recorded on 5 October 2026. We placed no real-money trade. The tested box shows what the rule did on EUR/USD candles recorded between 29 September and 5 October 2026. The strategy names no candle size and no expiry, so those are ours; the result says nothing about what will happen next.
The strategy combines a trend indicator with a countertrend indicator. Three simple moving averages set the trend: a long-term uptrend is the price over the SMA 200 with the SMA 10 over the SMA 30, and a downtrend is the mirror. The RSI with a period of 7 then catches a short-term pullback inside the trend: in an uptrend, when the RSI had been falling under 50 and turns up, the rule buys; in a downtrend, when the RSI had been rising over 50 and turns down, it sells. On 5-minute EUR/USD candles recorded between 29 September and 5 October 2026 the rule gave 104 signals, and the 15-minute trades won 43 and lost 61, 41.3% of the decided trades, well under the break-even rate of 54.1% at an 85% payout. On 1-minute candles with a 5-minute trade it gave 137 signals and 51.5%.
Quick answer
- Trend: an SMA 200, an SMA 10 and an SMA 30. Uptrend: the close is over the SMA 200 and the SMA 10 is over the SMA 30; downtrend: the close is under the SMA 200 and the SMA 10 is under the SMA 30.
- Pullback: the RSI with a period of 7 (the platform opens it at 14).
- Higher: in an uptrend the RSI of the previous candle is under 50 and lower than the one before it, and the RSI now rises.
- Lower: in a downtrend the RSI of the previous candle is over 50 and higher than the one before it, and the RSI now falls.
- Candles and expiry: not named by the strategy; we replayed 5-minute candles with 15-minute trades.
- Tested: 5-minute candles, 104 signals, 41.3% of the decided trades won; 1-minute candles, 137 signals, 51.5%. Break-even is 54.1% at an 85% payout, and a few days of one pair prove nothing.
How do you set up the trend and pullback strategy?
Set the chart
Choose the asset, the chart type and the candle size first: the indicators are calculated from the candles on the chart. The examples in this guide use 5-minute candles on EUR/USD. These steps use the web traderoom on a Practice balance, and the numbers in each screenshot match the numbers in the text. If you do not have an account yet, see how to register.
Step 1: Open Chart analysis
Click the indicators button (1), the wave icon in the chart toolbar at the bottom left of the chart. The Chart analysis panel opens with the tabs Indicators, Templates, Widgets and Scripts. Stay on Indicators.

Step 2: Find the Moving Average
Type “Moving Average” in the Search for indicators box (1) and click Moving Average (2). The same entry gives the simple and the exponential average; you choose the type in the dialog.

Step 3: Add the SMA 200
The dialog opens with a Period of 14 and the Type SMA. Type 200 in Period (1), keep the Type on SMA (2) and the red colour (3), and click Apply (4). The SMA 200 is the long-term trend line.

Step 4: Add the SMA 10
Open Chart analysis again and add a second Moving Average: Period 10 (1), Type SMA (2), a different colour (3), yellow here, and Apply (4).

Step 5: Add the SMA 30
Add a third Moving Average: Period 30 (1), Type SMA (2), a colour that differs from the other two (3), blue here, and Apply (4). The strategy compares the SMA 10 with the SMA 30.

Step 6: Add the RSI with a period of 7
Search for “RSI” and click Relative Strength Index (RSI). The dialog opens with the Base line – Period at 14; type 7 in it (1). The Overbought (2) stays at 70 and the Oversold (3) at 30. Click Apply (4).

Step 7: Use 5-minute candles
Click the candle time period button (1) in the toolbar at the left of the chart; it shows the current period, 5m in the picture. In the menu that opens, choose 5 minutes (2). The strategy names no candle size; the examples on this page use 5-minute candles.

Step 8: Read the chart
The three moving averages are drawn on the price chart: the SMA 200 (1), red, the slowest; the SMA 30 (2), blue; and the SMA 10 (3), yellow, which follows the price most closely. The RSI (7) panel sits under the chart with its lines at 70 and 30 (4).

How does the strategy find the trend?
The SMA 200 is the long-term trend: the price closing over the line means an uptrend, under it a downtrend. The SMA 10 and SMA 30 make the call safer: the uptrend needs the SMA 10 to plot over the SMA 30, and the downtrend needs it under. So the three lines have to agree with the price before the RSI is looked at. We read the three averages and the RSI (7) off the platform’s chart at 31 candles of one window and compared them with the formulas: the median difference was 0.005 pip for the SMA 10, 0.003 pip for the SMA 30, 0.004 pip for the SMA 200 and 0.2 points for the RSI, and the platform draws the point of a candle at its close.
That is a strict test. On the 1,100 five-minute candles of our recording after the SMA 200 existed, the uptrend condition held on 209 (19.0%), the downtrend condition on 495 (45.0%), and neither on 396 (36.0%). EUR/USD fell during the recording, so the downtrend condition dominated.
What are the entry rules?
Once the trend is clear, the strategy looks for a short-term pullback with the RSI of 7. Written so that every condition is checked on closed candles:
| Part | Usual rule | Our rule for the replay |
|---|---|---|
| Uptrend | The price is over the SMA 200 and the SMA 10 is over the SMA 30 | The close of the signal candle is over the SMA 200 and the SMA 10 is over the SMA 30 |
| Higher signal | The RSI of the former candle is under 50 and lower than the one before; now the RSI reverses and shows a higher value | RSI(i-1) < 50, RSI(i-1) < RSI(i-2) and RSI(i) > RSI(i-1) |
| Downtrend | The price is under the SMA 200 and the SMA 10 is under the SMA 30 | The mirror |
| Lower signal | The RSI is lower than on the previous candle, which was higher than the one before, with the top formed above 50 | RSI(i-1) > 50, RSI(i-1) > RSI(i-2) and RSI(i) < RSI(i-1) |
| Entry | Not stated | At the close of the signal candle |
| Expiry | Not stated | 15 minutes on 5-minute candles, 5 minutes on 1-minute candles |
The SMA is a tool for the long-term trend and the RSI a countertrend tool for catching short-term pullbacks; the overall trend is expected to continue after the pullback.
Two signals of the recording, step by step
The first Lower signal and the first Higher signal of the rule on 5-minute candles, in time order, not picked by outcome. All times are the platform clock, which is UTC minus three hours; the date is 29 September 2026.
Lower signal, 17:55
The signal candle (4) opened at 17:55 and closed at 18:00 at 1.1342, under the SMA 200 (1.134313) (1), with the SMA 10 (1.133833) under the SMA 30 (1.133938) (2): a downtrend. The RSI (7) had closed the two candles before at 84.0 and 88.0, over 50 and rising, and fell to 76.8 on the signal candle (3): a pullback in the downtrend is turning down again. The rule says Lower, and the 15-minute trade opens at that close. It ends at 18:15, when the candle (5) that opened at 18:10 closes at 1.13426, 0.6 pip higher: it lost.

Higher signal, 18:20
The signal candle (4) opened at 18:20 and closed at 18:25 at 1.13433, over the SMA 200 (1.134264) (1), with the SMA 10 (1.134165) over the SMA 30 (1.133987) (2): an uptrend. The RSI (7) had fallen from 57.7 to 46.5, under 50, on the previous candle and rose to 60.9 on the signal candle (3). The rule says Higher, and the 15-minute trade opens at that close. It ends at 18:40, when the candle (5) that opened at 18:35 closes at 1.13429, 0.4 pip lower: it lost.

The trend and pullback rule, tested
We scored the rule on the 1,334 five-minute candles of our recording with a 15-minute trade, and for comparison with a 5-minute trade and on the 1,505 one-minute candles. The SMA 200 runs over the whole recording, as it does on the platform, and signals start once it exists.
Tested on IQ Option: the SMA 200, SMA 10/30 and RSI 7 pullback rule, EUR/USD candles of 29 September to 5 October 2026
| Asset and candles | EUR/USD binary (regular, not OTC): 1,334 five-minute candles (2026-09-29 01:55 to 2026-10-02 20:55 UTC and 2026-10-04 21:00 to 2026-10-05 17:00 UTC); 1,505 one-minute candles (2026-10-02 18:23 to 2026-10-02 20:59 UTC and 2026-10-04 21:01 to 2026-10-05 19:28 UTC). The candles were recorded from IQ Option’s Practice traderoom. The replay places no orders; it only scores the rule on those closed candles, at an 85% payout. |
|---|---|
| Rule tested | The rule on closed candles, the option opening at the close of the signal candle: Higher when the close is over the SMA 200 and the SMA 10 is over the SMA 30 (uptrend) and the RSI (7) of the previous candle is under 50, lower than the one before it, and the RSI now rises; Lower in the mirror case (downtrend, the RSI of the previous candle over 50 and higher than the one before it, the RSI now falls). The SMA 200 runs over the whole recording, as it does on the platform. The box lists the 15-minute trade on 5-minute candles first, then the variants. |
| Signals | Trend and RSI pullback, 5-minute candles, 15-minute trade: 104 signals (36 Higher, 68 Lower) same, 5-minute trade: 104 signals (36 Higher, 68 Lower) same, 1-minute candles, 5-minute trade: 137 signals (75 Higher, 62 Lower) |
| Outcomes | Trend and RSI pullback, 5-minute candles, 15-minute trade: 43 won, 61 lost, 0 tied; 41.3% of the 104 decided trades won; net −$0.23 per $1 staked at 85% (−$0.21 at 91%) same, 5-minute trade: 44 won, 60 lost, 0 tied; 42.3% of the 104 decided trades won; net −$0.22 per $1 staked at 85% (−$0.19 at 91%) same, 1-minute candles, 5-minute trade: 70 won, 66 lost, 1 tied; 51.5% of the 136 decided trades won; net −$0.05 per $1 staked at 85% (−$0.02 at 91%) |
| Break-even | At an 85% payout a trade needs to win more than 54.1% of its decided trades to break even (1 ÷ 1.85); at 91%, more than 52.4% (1 ÷ 1.91). |
A replay is only a look back at candles recorded on the dates above: it placed no real orders, covers about four and a half days of one pair, and counts overlapping trades as if they were independent. A short test proves nothing about the future, and no profit and no win rate is promised here. IQ Option’s own blog on backtesting says that most strategies need dozens, and often hundreds, of trades before a result means anything.
On 5-minute candles the rule gave 104 signals (36 Higher, 68 Lower): 43 won and 61 lost with a 15-minute trade (41.3%, with a 95% interval of 32% to 51%), and 44 and 60 with a 5-minute trade (42.3%). Higher trades won 13 of 36 and Lower trades 30 of 68. On 1-minute candles the rule gave 137 signals and won 70 against 66 (51.5%, interval 43% to 60%). In our recording the pullback in the direction of the trend was followed by a further pullback more often than by a continuation on 5-minute candles. That is one sample of 4.5 days; the expectation that the trend continues after the pullback is not what this sample shows.
Pros and Cons of the trend and pullback strategy
| Pros | Cons |
|---|---|
| Three averages agree before a trade: a strict definition of the trend. | The trend condition held on only 19% of the candles for the uptrend; the strategy waits a lot. |
| Combines a trend tool with a countertrend tool. | On 5-minute candles the trades won 41.3%, under the 54.1% needed at an 85% payout. |
| Flexible: other oscillators, such as the Stochastic or the CCI, can replace the RSI. | No candle size, expiry or stop is given, so the test needs choices that are ours. |
Common mistakes
- Using the RSI at 14. The strategy asks for a period of 7.
- Trading against the SMA 200. The price has to be on the side of the SMA 200 that matches the trade.
- Skipping the SMA 10 and SMA 30 check. They make the trend call safer.
- Entering before the RSI turns. The rule waits for the RSI to reverse after the pullback.
- Ignoring the margin of error. A 5-minute result of 41.3% on 104 trades has an interval of 32% to 51%.
Related guides
- RSI, Stochastic and EMA 200 and RSI, EMA and engulfing candles
- SMA 10 and SMA 30 with support and resistance and Trading with the SMA 20
- Leading and lagging indicators
- All indicator guides and all strategy guides
Frequently Asked Questions
Q: What is the trend and pullback strategy?
A: A strategy that finds the trend with three moving averages (SMA 200, SMA 10, SMA 30) and enters on a short-term pullback shown by an RSI of 7.
Q: How do I know the trend?
A: Uptrend: the price closes over the SMA 200 and the SMA 10 is over the SMA 30. Downtrend: the price closes under the SMA 200 and the SMA 10 is under the SMA 30.
Q: When do I buy?
A: In an uptrend, when the RSI of the former candle was under 50 and lower than the one before it and the RSI now rises.
Q: When do I sell?
A: In a downtrend, when the RSI of the former candle was over 50 and higher than the one before it and the RSI now falls.
Q: Does the strategy win?
A: Not on 5-minute candles in our replay: 43 of 104 trades won with a 15-minute expiry. On 1-minute candles 70 of 137 won.
Q: Can I use another oscillator?
A: The Stochastic Oscillator or the CCI can replace the RSI, the strategy says. We tested only the RSI.