When they are in OS or OB i just cruise it and make sure the EMA Spread looks healthy, with no particular bunching.
In some cases if you are a more aggressive trader or you missed the entry, you can enter in the OB or OS zone but its good to make sure before you do so, that you have a good EMA Spread visible + RSIs' condition and of course logical R and S on the chart.
You are an intelligent person! What is your educational background? I'd swear you were in your 40's or more by the wisdom you've transfered from your brain to the keyboard. Very impressive, and you've mastered the English language as well.
Do you set your EMA on the open, close, weighted or doesn't it matter.
Thank you for sharing your system and knowledge it is very helpful.
pwegner, I believe all EMAs are applied to price close. Anyways, that how I have set mine.
After EMA5 & EMA10 crosses and RSI crosses 50, what do you guys see as spread or distance between the 2 EMAs when you make your grand entry? 2-3 pips?? I usually want to wait for visible gapping.
I’m sorry for not writing for so long, but work has been very hectic the past few weeks, plus I’ve been spending a lot of time optimizing my system for better results.
Let’s see what GBP/USD is up to.
Price consolidation from the high of .9846 took us as far as .9750, it tried testing it a couple of times producing two candle stick stars, all and all you should know that dojis and stars around major R and S are good reversal indicators, so on its own just with that you should start becoming weary.
Now as I mentioned before, one confirmatory factor is not enough to let me trade enter a trade, so we need to look for more evidence and lets see what we can find…
1. Dojis / Stars at .9750 (Price consolidation high from .9846) 2. We see a 5/10 cross around the .9730 area (H1) 3. PAR SAR confirm the down move 4. RSI is below 50 5. MACD is below 0 6. Stochastics are looking fresh 7. Trend line was clearly broken (the white ray)
As you can see we have a lot of factors and as in any strong move, the white 5 ema cuts right through the other emas like a hot knife through butter, these are all very good signals.
So what are our targets here ?
1. First major Support at .9632
2. Second major Support at .9565 3. Third major Support at .9450 4. If we break .9450 then it’s a whole new bearish world down there, much of which we can discuss later should such a scenario be confirmed
Talking about scenarios once more we try and avoid becoming surprised so we assume there are more than one scenes available.
1. Is what we just talked about up there. 2. Price bounces of .9632 (S1) and retests .9750
I very much doubt scenario 2 due to the strength of this move, plus look at the emas we don’t even have a clear spread yet, which leads me to believe there is more to come on the downside.
You will notice I’ve made a few additions and changes to my charts.
-I’ve added a few more emas. I now have 5,10,20,30,40,50. I added 30 and 40 not so much because I need them, but more of a visual aid.
-You will notice I’ve added horizontal lines at each 50 pips. The reason I’ve done this is because my experience tells me the price always moves 50 pips, as long as you can determine the move direction and catch the break out you will always be able to bag the 50 minus the breakout pips, so lets say at least 40. It’s strange but it works, in fact even if you scrapped all TA and just determined the trend direction and bough and sold at each 50, you bag at least 30-50 pips. Another factor here is that every 50 is almost always a significant support and resistance level.
-I am testing RSI levels of 7 and 9 at the moment, 7 seems to give me very good flexibility in catching tops and bottoms for the moment.
Anyway. From what I can see now as I’m writing this is that the price is correcting of S1 .9632. I think that .9650 or .9660 (10 EMA on M30) will handle the price after which we can aim to follow the bearish scenario.
Now as I’ve said before. We do our TA the best we can, we enter our trade and then we monitor to see if we were right or wrong, there is always only two outcomes here.
Minimize your Stop Loss value every time you can and the more the trade advances in your direction. Preferably move your stop loss to your entry so you don’t loose anything even if the trade goes against you.
That’s it guys, I’ve already bagged my 50 pipos for today. I will wait for the retrace and eventual break of S1 before I enter short again, in which case I will be targeting .9565
Regards, E. Lang
PS: I use Exponential EMAs calculated at the Closing price.
Perhaps meaningless to some, but i wanted to show you how important it is to draw trend lines.
Whenever we get into consolidation or a retrace the first thing you should do is draw your trend lines so you can determine when best to enter of the retrace bounce.
Please take a look at the chart i've attached.
As you can see i've gone down to the 5 minute chart to get the best entry point. Like i said before i closed my position out around S1 and said i'd wait for a proper break, and when i say that i mean that:
1. Price breaks decisively through S
2. Retraces upwards
3. Breaks back down below the new low (formed due to the retrace)
- This is what i call a checkpoint. The price leaves checkpoints here and there and thats where we have our critical R and S levels. When we have a rally or a decline, the price will retrace and create a checkpoint.
Think of it as saving your progress in a video game, this way if you die you know where you have to go back to (your latest checkpoint) and if you continue moving onwards, you know where you have to create your next checkpoint eg: end of level or mid level (in other words the next R or next S)
Hey, thats how i think of it
PS: Also notice how 5 EMA and 10 EMA handled the price so gracefully, like a ballerina doing the swan dance. This is a good signal signifying a healthy move.
PSS: We also have the next 50 pips coming ahead (.9600), we may expect some sort of a checkpoint to be ceated there, if this all works out we will run for .9565