Moving EMAs
Show the direction and strength of the global trend and provide additional levels for trading👇
EMA designation on the chart
The indicator uses the most popular moving averages - EMAs with periods 20, 50, 100 and 200:
Color lines automatically changes at the moment the global trend is broken - this is needed to quickly understand market sentiment
Line thickness ---- and the fill color indicate the period (20 - the thinnest and brightest, 200 - the thickest and dullest...) - this is needed to quickly understand which moving average is which and not get confused by different colors
The direction and position of the lines help determine trend and sideways movement
Green EMA lines are arranged in a fan in order, directed upwards - this indicates a strong bullish trend.
You can consider long trades when the price touches the EMA 20 or 50 - often the price bounces off the EMAs as support.
Green EMA lines intersect each other but are directed upwards - this indicates a bullish trend with strong corrections.
You can consider long trades when the price touches the EMA 200 - this is a strong level from which the price often bounces as from support.
Red EMA lines are arranged in a fan in order, directed downwards - this indicates a strong bearish trend.
You can consider short trades when the price touches the EMA 20 or 50 - often the price bounces off the EMAs as resistance.
Red EMA lines intersect each other but are directed downwards - this indicates a bearish trend with strong corrections.
You can consider short trades when the price touches the EMA 200 - this is a strong level from which the price often bounces as from resistance.
If EMA lines are grouped, often cross each other and change color - this indicates sideways movement and the absence of a clear trend.
In this case it is better to trade bounces from the nearest support and resistance levels that "squeeze" the price from above and below.
Application of EMA in trading
EMA lines often act as trend levels from which the price can bounce:
In a trend, the price most often bounces off EMA 20 and 50 - at this moment you can consider opening a trade in the direction of the trend
EMA 200 plays the role of a key support or resistance level for long-term moves - when the price approaches the 200 line a bounce can be expected
Use the direction of the EMAs to filter false signals against the trend
If the EMA lines are grouped, often cross each other and change color - this indicates sideways movement and the absence of a clear trend - in this case it is better to trade bounces from the nearest support and resistance levels that "squeeze" the range from above and below.
First of all, try the simplest trading strategy with EMAs from the indicator developer
When a strong bullish trend, the first upward bounces often occur from the EMA 20 or EMA 50 without deep declines, barely touching the moving averages.
When a strong bearish trend, the first downward bounces often occur from the EMA 20 or EMA 50 without deep pulls, barely touching the moving averages.
Bounce off EMA 200 upwards is often accompanied by elements of a false breakout - a sharp acceleration before the breakout and a rapid return of the price back past the level, candles may have large wicks.
Considering this, it is better to open the position after confirmations of a price reversal appear on the lower indicator.
Bounce off EMA 200 downwards is often accompanied by elements of a false breakout - a sharp acceleration before the breakout and a rapid return of the price back past the level, candles may have large wicks.
Considering this, it is better to open the position after confirmations of a price reversal appear on the lower indicator.
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