Note to onself, a very important one too. When price is inbetween EMA 50 and 200 it is said that you continue with the trend. However, ensure that price does not drop below the lower band on a up trend or vice versa. This is exactly what happened the day I made a mistake with my SL on oil.
Two threads earlier I was complaining about how I got caught out by oil because my SL was not wide enough. That was one key thing, another which I did not mention at the time is that there was a clear change in trend taking place right in front of my eyes.
My point of entry was 57.49, on the chart below I can see the price had already tested the water below the lower band two candles earlier on the H4 chart and on the next candle it closed below the EMA 200:
There was some retracement after I entered the trade, loosing out on a trend down of almost 300 pips because the SL was not wide enough to cover the retracement.
I’ve gone over this again as I was looking at AUDUSD and I can see the same thing, only this time it is looking like the trend is changing from going down to moving up. Looking at the H4 chart, the first point on this is that EMA 50 had crossed over the EMA 200 starting an upward trend. The upward trend continued and price had broken through 0.705 before re-tracing back below this level. Ever since 0.705 has become a resistance level that price is struggling to break through:
The daily chart is showing that the EMA 50 and 200 are coming close together, if a crossover does happen then it will begin a upward trend on the daily chart as well. The key to this is can price break through 0.705 and find support. I’ll be going long on this pair if the 0.705 resistance is broken and finds new support. However, if the price drops below 0.7 then we could possibly see a continuation of the downward trend, down to 0.69 with the EMA 50 and 200 crossing over again on the H4 chart.