Price makes a new low at 0.84088 below the 50 EMA and then retraces back to the 50 EMA making a new high at 0.85148.The chart below illustrates how the sell trade set up is identified. Measure the distance of the high to the low and project the distance 1.5 times from entry.Place a sell order at the previous low with stops above the low at the most visible intermediary high.
Once price breaks this low, wait until a new low is made and price starts to retrace again.Using the horizontal line tool, mark the low point before retracement.Price must make a low and then retrace back to make a high, contained within the 200 and 50 EMA.Price must be trading at or below the 50 EMA.If either of the conditions is met, we then wait for the following set up to appear: Sell Bias: 50 EMA must have recently crossed over below the 200 EMAīuy Bias: 50 EMA must have recently crossed over above the 200 EMA Once the chart is set up, we look for the following criteria: The chart below shows the set up for this strategy. Because the H4 chart interval closely follows the daily charts, trends are well reflected in this time frame.ĥ0 EMA applied to closing prices on the H4 charts: This moving average will be the key towards managing risks in our trade.
Indicators used and their purposeĢ00 EMA applied to closing prices on the H4 charts: This forms the main basis of our bias.
This strategy does not rely on the moving average cross over but rather enters the trend after it is established and exits on a quick profit. In this trading strategy, we make use of the 200 and 50 periods exponential moving average applied to the 4-hour charts. One of the commonly used indicator, the moving averages form the basis for many different trend following strategies. For traders looking for a trend following strategy, there is nothing better and simpler than using the moving average.
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