EMA Cloud Pullbacks: Second-Chance Entries and Holding Winners

Video: The ONLY 2 Indicators I’ve Used to Make $800/Day Trading
Creator: Deevestments
Original Video: Watch the original video
Difficulty: Intermediate

The Big Idea

Missing the first move does not require chasing the next candle. Deevestments uses groups of exponential moving averages to identify places where a trend might offer another entry—and to judge whether a winning position still has a reason to remain open.

The useful framework combines a pullback, a previously identified price level, and a reaction showing that the trend may be resuming. A colored cloud alone is insufficient. The title’s $800-per-day figure is a creator performance claim, not an expected result or a verified earning rate.

What the Clouds Represent

The transcript describes fast EMAs of 5, 8, 9, and 12 periods, followed by a slower pair at 34 and 50. On a one-minute chart, these lengths count one-minute bars. The fast group responds more quickly; the slower group provides a deeper pullback reference.

These averages summarize past prices; they do not cause buying or selling. A cloud can help organize observations without identifying the “true” trend or guaranteeing support. Overlapping EMA signals are also related calculations, not independent pieces of evidence.

The installation walkthrough names an EMA-cloud indicator, transcribed as “Riftster,” and enables its first three clouds. Match the actual lengths in the settings rather than relying on a similarly named script or its default colors. The supplied transcript does not establish the exact implementation of the public indicator.

The Four Scenarios

1. A Shallow Bullish Pullback

After strong upward movement, price pulls back toward the fast cloud. The source looks for buyers to respond there before entering. The cloud provides context for the entry and its failure condition rather than permission to buy anywhere during the move.

The creator discusses this around the opening minutes, but the transcript also advises waiting at least five minutes in a later example. Those passages do not establish one consistent opening-time rule. Define the timing explicitly in a test instead of choosing whichever timing makes an example work.

2. A Deeper Bullish “Second Chance”

Price reaches the 34/50 cloud while the bullish structure remains intact. The preferred version aligns that cloud with a meaningful price level: a previous close, a higher-timeframe support area, or an opening-range reference. The entry follows a supportive reaction, not merely contact with the average.

In the Intel example, the creator watches the previous day’s close and a five-minute chart alongside the one-minute entry chart. A close below that price level would challenge the long thesis. Targets discussed include a 2R objective or the high already established during the session.

3. A Shallow Bearish Retest

In a downtrend, price rebounds toward the fast cloud. A bearish reaction at the cloud, especially near a broken support area acting as resistance, provides the proposed trigger. The source describes a bearish candle and a close-based invalidation above the key level.

4. A Deeper Bearish “Second Chance”

Price rebounds to the slower cloud while lower highs and lower lows remain intact. The source looks for sellers to respond, then targets a defined reward multiple or a prior intraday low. It cautions against expecting an unlimited continuation after a substantial decline.

Scenarios two and four are the creator’s preferences. Their purported frequency and stronger win rates are not established by the selected examples; they require a complete comparison sample.

Confluence Should Be Defined Before the Bounce

Consider an original hypothetical example. A stock’s previous close is $50.00, and its slow cloud spans $49.96–$50.08. Price dips into that area and closes at $50.15 with a bullish candle. The level and cloud overlap, but the trader still needs to decide whether the structure survived and whether a nearby resistance leaves enough room.

If a structural stop is $49.85 and the intended entry is $50.15, the planned price risk is $0.30 per share. A 2R objective is $50.75. If the session high already known at entry is $50.55, that nearer objective offers $0.40, or approximately 1.33R, before costs. Calling both targets “2R” would conceal the difference.

Choose the exit policy before entry: a fixed reward multiple, a known level, or a predefined management rule. A favorable entry does not make every possible target equally accessible.

A previous close is fixed before the session. An opening-range high is available only after that range completes. “High of day” must mean the high known when the decision occurs, not the eventual high discovered afterward.

Holding a Winner Requires an Invalidation Rule

The video’s second concern is selling whenever a single candle turns against the position. A minor pullback need not invalidate a trend trade. The relevant question is whether the level and structure supporting the entry have failed.

However, a close-based exit and a resting stop are different mechanisms. Waiting for a candle to close below support can expose the position to a larger intrabar decline. A stop order can trigger sooner but may slip; a stop-limit order can fail to fill. Define which mechanism applies and what exposure is possible while waiting.

Likewise, “real strength always gives a second chance” is too absolute. Some moves never return to a useful entry zone. A missed trade is an acceptable outcome; buying late solely to avoid missing it changes the setup.

A Stock Chart Does Not Determine Options Profit

The creator’s Intel example uses calls and describes profits per contract. That does not mean a 2R move on the underlying produces a 2R return on the option.

The Options Industry Council’s explanation of option price behavior describes how underlying movement and implied volatility influence premiums. Time remaining, changing sensitivity, and execution prices also matter. A favorable stock move can coexist with a disappointing option result.

For a hypothetical standard 100-share contract, a premium increase from $1.20 to $1.70 produces $50 gross, before costs. That calculation uses the actual premium change, not the underlying’s candle distance. Record expiry, strike, entry and exit premium, quoted spread, and contract multiplier when evaluating options executions.

Pine Script: Test the Deeper Pullback

//@version=6
strategy("CandleChasers: EMA Cloud Second Chance Lab", overlay=true,
 initial_capital=25000, pyramiding=0, margin_long=100, margin_short=100,
 commission_type=strategy.commission.cash_per_order, commission_value=1,
 slippage=2, calc_on_every_tick=false, calc_on_order_fills=false,
 process_orders_on_close=false)
if not timeframe.isminutes or timeframe.multiplier != 1
    runtime.error("Use a standard one-minute US equity chart.")
qty = input.int(10, "Fixed shares", minval=1)
requireLevel = input.bool(true, "Require prior close near slow cloud")
tolerance = input.int(10, "Confluence tolerance in ticks", minval=0)
cooldown = input.int(5, "Bars between entry submissions", minval=1)
allowShort = input.bool(false, "Enable hypothetical shorts")
atrLen = input.int(14, "Stop ATR length", minval=1)
atrMult = input.float(1.5, "Stop ATR multiple", minval=0.1, step=0.1)
rr = input.float(2.0, "Target / stop distance", minval=0.1, step=0.1)
e5 = ta.ema(close, 5)
e8 = ta.ema(close, 8)
e9 = ta.ema(close, 9)
e12 = ta.ema(close, 12)
e34 = ta.ema(close, 34)
e50 = ta.ema(close, 50)
slowTop = math.max(e34, e50)
slowBottom = math.min(e34, e50)
bull = e5 > e8 and e8 > e9 and e9 > e12 and e12 > e34 and e34 > e50
bear = e5 < e8 and e8 < e9 and e9 < e12 and e12 < e34 and e34 < e50
// Explicit regular-session symbol: confirmed previous daily close only.
regularSymbol = ticker.new(syminfo.prefix, syminfo.ticker, session.regular)
priorClose = request.security(regularSymbol, "D", close[1], lookahead=barmerge.lookahead_on)
pad = tolerance * syminfo.mintick
nearLevel = not na(priorClose) and priorClose >= slowBottom - pad and priorClose <= slowTop + pad
touch = low <= slowTop and high >= slowBottom
longSignal = bull and touch and close > slowTop and close > open and close > priorClose
shortSignal = bear and touch and close < slowBottom and close < open and close < priorClose
levelOK = not requireLevel or nearLevel
tradeWindow = not na(time(timeframe.period, "0935-1550:23456", "America/New_York"))
flattenWindow = not na(time(timeframe.period, "1555-1600:23456", "America/New_York"))
atrValue = ta.atr(atrLen)
stopTicks = math.max(1, int(math.ceil(atrValue * atrMult / syminfo.mintick)))
targetTicks = math.max(1, int(math.round(stopTicks * rr)))
var int lastEntry = na
canEnter = na(lastEntry) or bar_index - lastEntry >= cooldown
if barstate.isconfirmed and tradeWindow and levelOK and canEnter and strategy.position_size == 0 and not na(atrValue)
    if longSignal
        strategy.entry("L", strategy.long, qty=qty)
        strategy.exit("LX", "L", loss=stopTicks, profit=targetTicks)
        lastEntry := bar_index
    else if allowShort and shortSignal
        strategy.entry("S", strategy.short, qty=qty)
        strategy.exit("SX", "S", loss=stopTicks, profit=targetTicks)
        lastEntry := bar_index
if flattenWindow and strategy.position_size != 0
    strategy.close_all(comment="Session exit")
p5 = plot(e5, "EMA 5", color=color.new(color.green, 40))
p12 = plot(e12, "EMA 12", color=color.new(color.red, 40))
fill(p5, p12, color=e5 > e12 ? color.new(color.green, 85) : color.new(color.red, 85))
p34 = plot(e34, "EMA 34", color=color.blue)
p50 = plot(e50, "EMA 50", color=color.yellow)
fill(p34, p50, color=e34 > e50 ? color.new(color.blue, 85) : color.new(color.yellow, 85))
plot(priorClose, "Previous regular-session close", color=color.gray)

The following strategy isolates scenarios two and four on the underlying stock. It uses the transcript’s EMA lengths but adds objective rules: full directional stacking, a candle touching the slow cloud and closing back outside it in the trend direction, and an optional previous-close confluence requirement.

It deliberately replaces discretionary close-based exits with a fixed ATR-distance bracket and a 2R target. Those are research assumptions, not a reproduction of the original trade management. It uses one-minute bars, waits until 9:35 New York time, and disables hypothetical shorts by default.

What This Code Actually Tests

All entry conditions use completed one-minute bars. The regular-session previous close is requested with a one-bar daily offset, so the script does not expose the current day’s eventual close to earlier decisions. This follows TradingView’s documented approach to confirmed higher-timeframe data (paid link).

The EMA-stack requirement is stricter than the transcript’s visual descriptions. Bullish confirmation requires a bullish candle closing above both slow averages and the previous close; bearish confirmation mirrors this. Turning off confluence removes only the requirement that the prior close be near the cloud. It retains the directional previous-close condition.

Entry orders normally fill on the next available tick. The bracket is submitted with the entry using stop and target distances measured in ticks on the signal bar. Those distances remain fixed and anchor to the actual emulator entry fill. The stop therefore is not necessarily at the previous close, the signal wick, or a cloud edge.

There is no pyramiding, no fill-triggered recalculation, and a configurable gap between entry submissions. Repeated valid pullbacks can still create multiple trades. Positions receive a market-close request from 15:55 New York time, normally filled on the next available tick. Complete normal sessions are assumed; shortened sessions and missing bars require separate handling and can leave exposure overnight.

What This Code Does Not Test

It does not reproduce the indicator’s exact color logic, discretionary five-minute confirmation, swing-structure judgments, manually selected levels, the shallow setups, or options premiums. It also does not verify the $800-per-day claim.

The simulated $25,000 balance, ten-share quantity, $1-per-order commission, and two-tick slippage are illustrative. Adjust costs and capital in Strategy Properties. The 100% margin settings avoid assuming leveraged stock exposure, but hypothetical shorts do not model borrow availability or fees.

Historical bar fills remain approximations. If stop and target are both reachable within a bar, the emulator’s assumed path matters; Bar Magnifier may help where data is available. Gaps can produce losses beyond the intended stop distance. This code has been reviewed for logic but has not been compiled or backtested in TradingView. No performance result is claimed.

Useful Follow-Up Comparisons

1. Confluence: Compare the previous-close proximity filter on and off over identical dates and symbols. Measure net expectancy and trade count rather than highlighting a few attractive bounces.
2. Cloud depth: Investigate fast-cloud versus slow-cloud entries with the same confirmation and exit definitions. Keep the samples separate to test the creator’s preference.
3. Execution and exits: Stress higher costs, then separately compare the fixed bracket with an explicitly coded close-based invalidation. Record drawdown and adverse excursion as well as profit.

Reserve a later period before adjusting parameters. Review long and short results separately and identify whether one symbol or a few trend days account for most of the gain.

A Checklist for the Next Pullback

• Was the trend and relevant structure identified before the pullback?
• Which cloud is the setup using, and what fixed price level overlaps it?
• What completed price reaction confirms entry?
• What exactly invalidates the idea: a touch, an intrabar break, or a close?
• Does the intended target offer enough room after realistic costs?
• If trading options, what premium exposure and spread accompany the stock setup?

If those answers are unclear, the cloud is providing a visual impression rather than a complete trade plan.

Final Takeaway

EMA clouds can organize a second-entry opportunity after a missed move and provide context for holding a winner through ordinary pullbacks. Their value depends on the accompanying level, confirmation, and exit policy. Wait for a defined setup, accept that some moves will be missed, and test the stock pattern separately from the option used to express it.

Risk Disclosure: This material is for educational and research purposes only and is not financial or investment advice. Trading can result in substantial losses. Options buyers can lose their entire premium; leveraged trading can lose more than the original investment, and short selling can involve theoretically unlimited losses. Backtests are hypothetical, depend heavily on their assumptions, and cannot reproduce every aspect of live execution. Commissions, spreads, slippage, liquidity, gaps, order behavior, borrowing costs, option pricing, market regime changes, and discretionary decision-making can materially affect real-world results. Indicators, stop orders, and historical examples do not guarantee profits or limit every loss.

This article is an independent educational companion to the video and is not affiliated with, sponsored by, endorsed by, or authorized by Deevestments.