pornfree porn Moving Average Cross Strategy
  • Moving Average Cross Strategy

    Joaquin Monfort
    Author: 

    posts: 1206, comments: 3

    Moving Average Cross StrategyThe moving average cross strategy is simply based on a short term moving average providing the trend direction, and the long term moving average providing a support or resistance level for the currency pair. The short term moving average we shall use for this strategy is the 50 day exponential moving average, and the long term moving average is the 200 day exponential moving average, used widely in the financial markets as the long term moving average of choice.

    The principle of this trade is to watch out for when the asset crosses and the short term moving average, cross the long term moving average. A cross from above to the downside is deemed a break of support and is a sell signal, while a cross from below to the upside is deemed a resistance break and the signal to trade the price advance is seen.

    In order to further filter the trades, we add an ultra-short term moving average, the 14EMA to aid in the trade entry. This works by showing when the market is trending. This is because the strategy works best in a trending market, and fails or lags in a range-bound market.

    INDICATORS

    1. 50 Exponential Moving Average (50 EMA): Signal line.
    2. 200 Exponential Moving Average (100 EMA): The trend line support/resistance
    3. 14 Exponential Moving Average (14 EMA): The entry trigger.

    Long Trade

    In order for long trade to be taken, the following parameters must fall into place:

    1. Wait for the price of the currency pair to cross above both 50 exponential moving average and 200 exponential moving average.
    2. Wait for the 50 EMA to cross the 200 EMA in the direction of the trend of the asset.
    3. Then wait for the 14 EMA to cross both the 200 EMA and especially the 50 EMA in the direction of the price cross, to confirm that the market is trending. The 50 EMA must be above the 200 EMA for the signal to be valid.
    4. Open a long trade at the open of the next candle.

    The trader must be extremely careful not to open this trade if the market is ranging. The only way this trade will work successfully is if the market is trending. Therefore, the trader must watch the direction of both the 50 EMA and 200 EMA. They must both be seen to be changing direction to an upward direction. The chart below illustrates this fact:

    Moving Average Cross Strategy

    Here is another example illustrating the trade conditions once more:

    Moving Average Cross Strategy Buy

    Exit Signal

    If the EMAs cross in reverse direction, or the price action starts to show signs of faltering e.g. at a resistance point, or a bearish reversal candlestick has appeared, then it is time to exit the trade.

    Short Trade

    In order for a short trade to be taken, the following parameters must fall into place:

    1. Wait for the price of the currency pair to cross below both 50 exponential moving average and 200 exponential moving average.
    2. Wait for the 50 EMA to cross the 200 EMA in the direction of the trend of the asset.
    3. Then wait for the 14 EMA to cross both the 200 EMA and especially the 50 EMA in the direction of the price cross, to confirm that the market is trending. The 50 EMA must be above the 200 EMA for the signal to be valid.
    4. Open a short trade at the open of the next candle.

    Moving Average Cross Strategy Exit

    Notice again, the 14 EMA (marked in yellow) has crossed below the 200 EMA and 50 EMA, while the 50 EMA has crossed below the 200 EMA. If the crosses all happen at the same time and in the direction of the asset’s trend, a positive signal is achieved.

    NB: Always wait for all the crosses to occur at the same time and wait for the 14 EMA to cross below the 50 EMA to confirm that the asset is trending.

    No Comments
    Author:
    Read more

    Sign in to post a comment

     
    You must be logged in to post a comment.
Ankara Escort Ankara Escort Bayan Ankara Rus Escort Ankara Eskort Escort Bayan Escort Ankara Ankara Escort İstanbul Eskort Ankara Eskort