Not really, actually this is the simplest part of the whole method. Albert Einstein once said, "Doing things as simple as possible, but not simpler", and for that, here is a good way to identify whether a market is in a trend.
Use two exponential moving averages:
21 EMA
55 EMA
When the EMA 21 EMA exceeds 55, the trend increases.
When the EMA 21 is below the 55 EMA, the trend is downward.
This trend definition is an oversimplification, but it's where we started.
Keep my graphics clean is important to me, and add additional moving averages can make things are a bit more messy than I normally like to see.
For this reason, I colored 21 and 55 EMA with a gray color, so they are mixed to some extent with the white background of my graphics. On a black background, a darker gray for EMAs would be my preference.
Here is an example of how my chart looks with the 21 and 55 EMA is shown.
The lighter gray on white graphic does not become overwhelming and annoying, and it is important to consider. When we exchange FMM operations take occasionally pass through the lines, and sometimes use the lines as targets and as support and resistance areas.
I do not want too distracted with lines, and submit it is a way to keep them in the background. They are there when we need it and remain silent when we do not.
Why the 21 and 55 EMA?
You can experiment with different settings as you like. 13 and 21 are common to moving averages. In many tests, I found that 21 and 55 are the most reliable to determine a trend. They are slow enough to determine when a real trend has legs, but fast enough to not delay in shifting of a trend.
By observing a graphic with the EMA 21 and 55, you will see that these two o'clock are extremely robust levels of dynamic support and resistance, and this element becomes excellent MA for trend followers.
The price never strays too before returning to the EMA 21 and then to the 55 EMA.
This is an important counter trend trading, the price moves away from the moving averages, but very quickly return to these levels. And because of the ability to provide excellent support and resistance, these moving averages are also amazing goals.
21 and 55 EMA work in all maturities, from 1 minute to month. This simplifies things too, without having to look different MA for different time frames, and as you knows, simple is good!
free to try your own settings, experiment with many combinations, with Exponential and Simple, or a combination of the two, feel you may find something you feel works best for you. Either way, the following pages will show you how to use them.
EMA 21 and EMA 55 as support:
EMA 21 and EMA 55 as resistance
Even when 21 and 55 are large areas of support and resistance are also excellent to recover the price. This concept alone makes these moving averages are major objectives in trade counter-trend.
An example of gold (AU) shown. Lately, Gold has had an incredible trend, and as you can see clearly, moving averages have provided excellent support as the price has gone up, but at the same time, gold prices have always returned to moving averages.
See the MA as support, resistance and objectives opens a new world of business possibilities!
In the next issue, we'll show you how confarmar and follow the trend ,
0 Comments: