This movement must also be coupled with RSI at level below 50 and the 80-period EMA must be above the price action.
An entry must be executed after the signal bar closes beyond the 5-period EMA.Ĭonversely, a short with-trend entry signal will be presented when the 3-period EMA penetrates the 5-period EMA from above and continues lower, with both of them crossing the channel made by the 13- and 21-period EMAs. Moreover, the 80-period EMA must be below the price action (bull trend) and RSI must have a value exceeding 50. Therefore, a long with-trend entry signal will be generated when the 3-period EMA crosses the 5-period EMA from below and edges higher, with both of them penetrating the channel of the 13-period EMA and the 21-period EMA. However, more conservative trading (which we advise novice traders to practice), calls for ignoring entry signals which are in the opposite direction of the 80-period EMA, thus the opposite direction of the major trend. In particular, these are a 3-period EMA and a 5-period EMA, whose crossing, when supported by the appropriate RSI value, tells us whether to enter long or short. Third, we use two other EMAs with even shorter trackback periods in conjunction with the Relative Strength Index to generate entry signals. If the EMA with a shorter look-back period (in our case the 13 EMA) is above the one with a longer trackback period (in our case the 21 EMA), we have a bull minor trend, and vice versa. Second, we will use a 21-period and a 13-period EMAs to point out the current trends direction (the current minor trend within the major trend). First, we need an 80-period EMA to show us the major trends direction – if the price is above the 80 EMA we have a bull trend and vice versa.
As we said, we will use five different Exponential Moving Averages.
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