Holy Grail (Linda Bradford Raschke)
Pullback setup in a strong trend: ADX > 30 + EMA-20 as the pullback target. Entry on the first high/low after the retracement.
Origin
Described by Linda Bradford Raschke and Laurence Connors in Street Smarts: High Probability Short-Term Trading Strategies (1995). "Holy Grail" is deliberately ironic — no holy grail, but a proven, simple setup based on the idea of re-entering a strong trend in the trend's direction after a brief pullback.
The setup (long version)
- Trend filter: ADX(14) > 30. The market is trending strongly.
- Pullback: price falls back to the EMA(20) and touches it (or comes within a small buffer).
- Confirmation: a candle closes back above the EMA-20 or makes a new intraday high.
- Entry: on a break of the last pullback high.
- Stop: below the pullback low (ATR-based works too).
- Exit: classically via a trailing stop in the trend direction or a 2R target.
The short version is mirrored (ADX > 30, pullback to the EMA-20 from below, short confirmation to the downside).
Why it works
- Strong trends (ADX > 30) continue after pullbacks more often than average.
- In trending phases the EMA-20 acts as dynamic support/resistance — many participants watch it, which creates reflexivity.
- Waiting for the confirmation filters out trend reversals: only enter once the trend is already attacking again.
How Botty implements it
strategies/holy_grail.py implements the setup with additional filters (adx_slope > 0 = trend growing, EMA-200 for the rough trend direction). indicators/compute.py supplies ADX, adx_slope and EMA-20.
Variants
- ADX threshold — instead of 30, often 25 for crypto (more volatile).
- Pullback target — some use EMA-21 or a 10-period SMA.
- Confirmation — classically "last high broken", alternatively a bar pattern such as an engulfing.