Hi, I have attached a chart, you will see I have used EMA 10 (Red), EMA 20 (Yellow), EMA 50 (Orange), EMA 200 (Pink)
As you see there all in order, well spaced, if I am reading this correctly is the monthly trend down
Why I ask, the last candle forming shows the trend is up, so what is the trend direction, and I understand that the EMA is a lagging indicator, so how do I read this ?
Is the trend up or down, if I was following a trend strategy,
I would say the trend was down in general, conforming to the EMA,
The trend is definitely down. You don’t need an EMA or anything but your eyes to tell you that. There is some signs that the momentum is weakening as the bars are starting to flatten. Be ready for a pullback or reversal.
I use those MA’s to. They are a good trend filter on daily charts. Lower than that, not nearly as dependable.
Notice I said filter. Those MA’s are not infallible, just because they are lined up doesn’t mean price can’t push right through them and make them spaghetti at any moment.
Always remember that with any indicator set, the indicator doesn’t cause price to move and react, price moves and the indicator gives you an average or a crossover or whatever it does as a result AFTER price has moved.
Another well used trend filter for daily is to count how many candles support at the 10 MA. If 10 or more, it’s a very strong trend, the 10 MA is holding as support and when price comes to it, it may work as a good entry.
The Stop loss being 50% the daily ATR pas the 10 MA. Myself I dont enter right as price hits the 10 MA as it could spike up and take you out and then go your way. I put in a stop order below/above price after it has past. That way if it keeps going and doesn’t retrace off the 10 MA I’m no the trading waiting out drawdown or taking a loss.
If price keeps whipping back and through the 10 MA, then the trend is either not a trend or too weak to buy/sell into and hold onto for a great length of time.
The 10 MA is often a good entry point in stongly trending pairs, this is where big money gets in and adds momentum.
Myself I also use ichimoku on daily. I also look for a cloud break above/below AND for the MA’s to line up. They dont have to be spread wide, just line up. This often is the start of a longer trend.
P.S. in your picture the 10 MA was pierced all over the place, so that would not be considered a strong trend, as far as the traditional way to trade using those MA’s
Thanx Phoenix for the heads-up appreciated, I was getting a little confused, regarding Trend Direction based on the mthly chart (pic) last candle forming was bullish, however the big picture was bearish,
Hello, will have a look at this thread, I warn you there is reading, but what you’ll read is a great demonstration of how to determine a trend and how to use it as a primary indicator of the action price, which is the only thing that is really important.
Good luck, there’s work, and what is never done.:eek:
