@BLOVE Have you completed Pipsology?
How Many Days Does It Take To Know If A New Trend Has Started?
To detect the strength and consistency of a trend using 50 EMA, what may you suggest I would love to see?
IMO, if it was that predictably simple we’d all be mllionaires. TA has a disadvantage in that they are all lagging, and which explains that traders attempt to fll their charts with likely movement patterns to predict what could happen in the future.
So you need to get back to basics. Keep up to date with fundamental economic information that could affect market movement.
Also utilise order flow actions that move prices, and aim to pinpoint areas on charts where you expect losing traders to close their trades or get stopped out. Most likely, support & resistance, and supply & demand zones.
A 30MA is not a predictor for the next 30 days. Its just an illustration of what happened on average over the last 30 days. But what happened over the last 30 days is more likely to continue for at least some days into the future than it is to do something different.
Its all about probabilities, there isn’t any tool that can see the whole future.
What I would suggest is to find examples of great trends on your charts and recognise some common features they have. So, in an uptrend the 20 will be above the 50 - both the 20 and the 50 will be sloping upwards - soon after the start of the trend the 20 will have crossed to go above the 50 - there will be more up days than down days - there will be more up weeks than down weeks - there will be more weekly closes above the 50 than below - how many consecutive? - there will be few weekly bars overlapping each other - if the USD is strong, the 50EMA will be sloping upwards on most USD-based charts (downwards if the USD is the counter currency) - etc. etc.
There are a lot of clues in even a simple chart but its best to decide what you are going to look for before you start searching - and what you look for must be useful and relevant to your strategy. Which is why I don’t bother looking at what the 200EMA is doing.
True talk. Of course, I am currently really working hard to be able to understand the fundamentals and also be able to incorporate it into my Trading analysis.
Thanks a lot.
It’s not about the days, it’s all about swing-high or low! If you get a counter trend move that beats the previous high/low, then follow that move so carefully!
Have you completed Pipsology?
Yes I did.
200 MA is a good one; but it’s too long to count a new trend! In addition, it shows so many fake trends!
I should be clear that I look for 4 positive TA features in order to declare an uptrend worth trading as a trend-following trade.
Thanks to @waltoncharles for jolting me to do this.
20EMA above 50EMA
No more than 4 weekly bars overlapping
High strength differential between base and counter currencies, using the 7 key charts of each and awarding bullish or bearish points according to price position relative to the 50EMA. So I look for the two currencies to score 7-0/0/7 down to 5-2/2-5.
Price has breached and closed above recent swing high.
Ok great job!!
If some of the answers seem confusing, I have often reviewed the lessons from Pipsology. Perhaps that may be helpful to you.
You are more than welcome! But the thing is, moving average and others all indicators are based on the candle moves!
This is true. Some traders would give more weight to certain TA features than to others, but price itself should never be the least important factor. (Maybe not so for long-term investors in stocks.)
Great example of multiple things traders can look at to help them identify a trend!
Please, May I request that you kindly elaborate on this point?
More especially on using 7 key charts of each and awarding bullish or bearish points …
Thanks a lot.
Yes its simple and very quick.
Each currency can either be a base currency in a pair or a counter currency - the first currency is the base currency, e.g. USD/XXX and the second currency is the counter currency, e.g. XXX/USD. Each of the 8 major currencies appears in 7 of the 28 pairs with the other 7 currencies. If price is above the 50EMA, that is bullish for the base currency, and bearish for the counter currency Go though all the 28 major pairs and award 1 point which is either bullish or bearish to each currency. The maximum, most bullish score is 7-0: the most bearish score is 0-7.
Right now the most bullish currency is NZD, 7-0, and the most bearish is CAD, which is 0-7.
For all 7 major NZD/XXX pairs price is above the 50EMA and for all XXX/NZD pairs, price is below the 50EMA = 7-0.
For all 7 major CAD pairs, CAD/XXX price is below the 50EMA, for all XXX/CAD pairs, price is above the 50EMA = 0-7.
The strongest trend-following pair is therefore: long NZD/CAD.
Thank You So Much For This powerful and mind blowing Idea.
I appreciate you a lot.
Thank you. Its simple and quick. It usually gives the same results as Dennis’s calculation methods on another long-running thread on trend-following.
BUT - it doesn’t give you entry signals, its a way to find set-ups.
Use the 20SMA or EMA but for early detection of the trend , then add a 200 SMA or EMA to understand the overall market movement, if the price is above the 20 and the 20 is above the 200 then it is a buy signal , but if the price is below 20 and the 20 is below 200 then sell buy make sure you have your entries rules met , maybe engulfing candles, morning stars, evening stars or what ever u have in your strategy , but the 20 and 200 MA are really powerful if you combine them with price action knowledge
@Moneyminded247 You are much Highly Welcome.
Also, thanks a lot for your Help and Contribution.
I so much appreciates.