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Exponential Moving Average (EMA)

HOW does a Moving Average work? #EZ-Learning by EXPLANATIONHey tradomaniacs and becoming traders, here some more education for you and especially for those who started trading and heared about that weird thing called Moving Average. I hope you enjoy it and learn something. If you need more education just check my videos and posts tagged as education. Peace and happy learning Irasor Trading2ez Wanna see more? Don`t forget to follow me. Any questions? Need more? PM me. :-)
BITFINEX:XRPUSDEducation
by Trading2ez
1
Technical and Fundamental Analysis of GBPUSD.On the daily chart, the 200EMA shows me where the long term trend will be for the currency, the EMA showed that price was below the EMA which indicates that the trend is bearish.I can also see a breakout on the price resistance line(1.26978) so it could show that the price will continue to go down.I switched to the 4 hour to see if the Ichimoku signals show bearish signals, there is bearish cross with Kijun Sen is in top of the Tenken sen which shows price is bearish. Price is also below the pink cloud which shows signal for the that the trend is bearish. Also the Chikou space shows that the line is below price which gives e the confirmation that the trade is more likely to go bearish. The fundamental news was on the GBP and it was the U.K. Average Earnings Index +Bonus is the measure of the change in the price businesses and the government pay for labour, including bonuses. The Average Earnings figure gives us a good indication of personal income growth during the given month, but also potential inflationary pressures. The U.K. Claimant Count Change is the measure change in the number of unemployed people receiving unemployment benefits in the U.K. during the reported month. A rising trend indicates weakness in the labour market.. as both of the readings were lower than previous, the Average Earnings Index +Bonus previous was 2.5% and the actual was 2.4%, the U.K. Claimant Count Change previous was 9.0K and the actual forecast was 6.2K .it means that price will do be in a bearish forecast. I would go short on this major pair.
Short
by LDForex_
NZDJPY Bulls & Bears Fighting To Gain Control At 75.000 Level!This is the forex quote for the New Zealand Dollar vs. Japanese Yen exchange rate. NZD (the 'base currency') is quoted in terms of JPY (the 'counter currency'). The Yen is a historically low-yielding currency, making an attractive vehicle to fund carry trades (where traders borrow cheaply in JPY to buy higher-yielding currencies, including NZD). Investors tend to favor carry trades at times of optimism about global economic performance and stability; they shun them at times of market stress. This makes NZD/JPY sensitive to swings in broad-based market sentiment trends. The pair is likewise responsive to economic news - both domestic and that of key trading partners (notably China) - that shapes expectations for Reserve Bank of New Zealand monetary policy. Source of above info: www.dailyfx.com Looking at the daily charts, the price has been moving inside the wedge that has been held on many occasions, However the difference this time around is the presence of a strong psychological of 75.000 which is acting as a crucial support. Both bulls and bears are fighting to regain the control of the trend at the moment!. However both long and short scenario are possible for this pair but a LONG scenario is more favored in this case. For us to go LONG on this trade certain criteria needs to be met, First of all the daily wedge and EMA 50 needs to be broken followed by the retest of the 50 EMA on the daily charts. The above chart represents the weekly chart, which also indicates that the price is confined in another wedge. If at all the criteria are met it would be wise to target the upper trend line on the weekly wedge for our TP levels. Or we could also target the EMA 50 on the weekly time frame for our TP levels. The monthly chart above displays the levels of support and resistance for more info. The current price seems to be struggling on where to head next at the 75.000 crucial level. It remains to be seen if the bulls can take control of the situation which will most likely happen if the daily wedge is broken. I will provide any signals pertaining to this pair once or if the criteria are met. Cheers Follow me for more in-depth analysis and signals
Long
by FX618Analysis
4
Wheat, Soybeans, and CornWhy Wheat and why now. What about Soybeans and Corn. Looking across the Ags, it seems that Wheat is enjoying the most upside. Why is this. In keeping with my focus on the DMI and ADX, I think you’d have start by looking at the monthly chart of the 3. One of the key tenants of DMI/ADX is that best trades seem to originate when the ADX is below 20 for an extended period of time. And, for Wheat, that has been since June of 2013. Since then, it has moved between a couple of lines and for the most part, remaining below the 13 period EMA of the high. As an aside, in my previous articles, I used EMA’s on the close of price but have moved to a 13EMA on high, 26EMA on low and 20EMA on close with the intent to use them as a channel for pullbacks based of ADX action. June of last year, the downtrend line was sharply broken but before that, the DMI made a significant move when the +/-DI swapped. Although this had happened several time during the past 4 years, what eventually became important is that the low of this candle was never broken while the high was continually tested and broken with the last time starting the recent uptrend. Also, note that during this time that the +DMI continued to make higher highs will not making lower lows. With the ADX moving above 20 in May of this year, a strong signal was given that the market was ready to move up. Now, consider the same discussion for ]Soybeans : Notice the size of the candle that caused the last swap. I’ve included a possible consolidation pattern. And for Corn : With Corn the interesting thing on recent action is that the DI’s changed dominance but did so where the swap was to -DI but with a green candle. I don’t see this too often but seems to give mixed signals.
OANDA:WHEATUSD
by mxb1961
GBPCHF Wedge On Daily TF On The Verge Of A Breakout ?This pair has been confined in a wedge on the daily chart and is poised to break out soon enough. Even its parent pair the GBPUSD has high probability to break to the upside. Further GBPCHF is testing a crucial resistance at the 1.29000 level and the pierce of this level on the weekly chart would make the H &S pattern complete, however the momentum to the downside might be limited as it can be met by multiple EMA resistance and ascending long term trendline! Therefore a move or breakout to the upside is a more favorable scenario to enter our trade. For the criteria to be met, the wedge needs to be broken on the daily chart and the price must break and close above 50 EMA. This will be followed by the retest of the 50 EMA. I will monitor this pair closely and in the favor of higher probability i prefer the break to the upside is a more likely scenario compared to the H & S pattern formation which will break to the downside. Stay tuned for any updates. Just a reminder i NEVER double my risk by opening two positions on the GBP pairs as it doubles the risk!. What i do look for is what GBP pair could give me a better risk to reward ratio and has the least path of support or resistance present. If you like the analysis follow me and stay tuned for any updates. cheers
Long
by FX618Analysis
Trading the DMI with ADX, TSI and EMA (WHEATUSD) PullbacksSo far, I’ve focused on how to get into the market based on the DMI swap in dominance between the +DI and -DI. Once you’re in or if you missed the original entry, how can you get into a trend while minimizing your risk. As I’ve noted before, I’ve not been able to successfully trade on a regular basis but my hope is to use everything I’m documenting here to change that. In one of the links that I shared in my first article is a PDF that has some really good stuff on using the PDF to trade breakouts. In it, there is a section on how to trade pullbacks within a trend using a 20 period EMA. In my charts, I use a combination of the 13 and 26 period EMA to sort of do the same thing (I use a range between the two vs. just one EMA). Full credit for the strategy is given in the PDF and the basics of it are outlined as follows: 1. The ADX must me moving up and above 20 2. Look for a price retracement to the 20 period EMA. It goes on to note that “usually the price retracement will be accompanied by a turndown in the ADX” 3. When price touches the 20 period EMA (in my case, when it enters the range or touches the 26 period EMA), “put a BUY STOP above the high of the previous bar” 4. Once filled, enter a protective stop at the newly formed swing low 5. If stopped out, re-enter the trade by placing a new BUY STOP at the original entry price 6. After a successful trade, the ADX must once again turn up above 20 before another retrace The PDF walks through this strategy as outlined above along with providing some examples. However, the examples are based on the same time frame as the original entry. I’d like to explore and propose that in a strong trend at the daily level, the 4 hour chart will provide a short term strategy. By applying the same concept to the 4 hour chart as outlined above then you may be able to find points that either provide opportunities to enter into an existing trend, or add to positions you may already have within the trend. As the 4 hour chart begins to show weakness and a breakdown below the 26 EMA, it’s possible this is an indication that the daily chart will now cycle through the same steps as noted above which would provide an opportunity take profit on existing positions while waiting for the next setup to enter with the trend on the daily chart. I’ve hi-lited areas on the 4 hour chart for WHEATUSD that fit into this strategy with the current up trend on the daily chart that started recently. Note, that the last area in yellow appears to be breaking down below the 26 EMA signaling that the daily chart may begin to cycle through it's own pullback.
OANDA:WHEATUSD
by mxb1961
5
Trading the DMI with ADX, TSI and EMA (BTCUSD)Continuing with using the ADX/DMI on a daily chart to trigger a trade with the 4 hour chart to refine the entry, I’ve marked up the recent BTCUSD action similar to the wheat chart in previous article. As you can see from the daily chart, price dropped on the 4th causing the DI’s to swap dominance on the DMI. With the ADX still above 25, this could be viewed as a good signal that a real change is occurring. On the 4hr chart, I’ve boxed out the day for the candle that caused the change and placed some entry targets for a possible retrace to enter. Again, as I noted at the end of the last article, the Wilder strategy would call for the sell to be placed at or below the extreme of the day of the change. However, this does open up the trade to more risk. By tracking the day and subsequent action on the 4 hr chart, it’s possible to reduce the risk by placing a stop order in the 25-75% range with a stop just above the high of the day. In this case, it would have worked however, there are cases which I’ll review next where the trade would have been missed.
BITFINEX:BTCUSD
by mxb1961
Trading the DMI with ADX, TSI and EMA (WHEATUSD) cont.Setting up a trade based on daily signal using 4 hour chart for timing. In this scenario, the daily chart had its ADX below 20 since July 3rd. When trading with DMI/ADX, periods of breakout after the ADX has been below 20 for at least 7-10 periods can provide good results. In this case, the 4 hour chart had dropped below 20 for an extended period too. On July 17th , price moved up which caused the +DI to cross up over the -DI. Based on Wilder's strategy, you would place a buy stop above the high of the day (either the high or a number greater than it). With this strategy, you may consider the stop at a point below the low for the same day. In cases where the daily range is small, then placing orders in this way may not cause too much of a draw down. However, in case where the daily range is large, the risk is much higher though there are cases where it's just the way it works out (recent ngas activity that I'll use in an example in a future article). Alternatively, you could choose to place the stop at something like a 75% retrace of the daily candle when placing the buy stop at the high of the day. Another option is to place your buy order as a limit order somewhere in the 25-75% pullback of the daily range that caused the DMI to swap . On the 4hr chart, marks the day that daily DMI swapped dominance while shows the 25/50/75% breakdown of this price range. While this strategy can reduce the risk of having a larger draw down, it also introduces the risk of missing a trade. I'll review more examples of both of these scenarios in next article.
OANDA:WHEATUSD
by mxb1961
Trading the DMI with ADX, TSI and EMA (WHEATUSD)In my first article, I provided a summary of the tools I’m using plus links to some good material that gives more in-depth details of each. As I go through each concept, I’ll refer to the 3 time frames that I will use in determining a trade. • Weekly: to get the overall bias of the market • Daily: to identify a day to take a trade or to setup a trade • 4 hour: to identify the timing or refine the timing of the trade My goal is to trade a small set of markets across various types which will include E-Mini contracts of Wheat and Corn and E-Micro contracts of Euro, Aussie$, and Gold. I’ve tried to trade crude oil (wti) options with mixed success but won’t actually outline trades but use it in the examples. For the E-Mini’s, I’ll limit my initial entry to 1 contract while the for the E-Micro’s (except Gold), I’ll up limit to 2 contracts. My main goal now is to make more money than I lose to remain in market so that I can continue my education in trading. In this article, I’ll review one of the primary aspects of the DMI as outlined by Wilder and that is the equilibrium point of a market. In his book, on page 45, he states that “Good directional movement is not simply straight up or straight down movement. It is also good up and down movement in excess of the equilibrium point. This, in effect, is what the ADX measures. The equilibrium point is reached when the +DI equals -DI.” More detail can be found in his book and various online articles. In the example of WHEATUSD (I trade e-mini wheat but use WHEATUSD for analysis as I can get near real-time data feed on TV without additional cost), I’ve noted 3 times since April of this year that the market has been at an equilibrium point on the daily chart (A, B, and C picked to mark the spot but not to imply any type of wave stuff). In the first 2 cases, the ADX was above 20 while in the 3rd, the ADX was below 20 at the time of the cross. General speaking, when the ADX is declining and is at 25, it is best to be cautious when the DI’s cross. However, when the ADX drops below 20, it’s best not to trade but to wait for some type of pattern to evolve and trade the breakout. I’ll go through examples of this in future articles. For now, I’ll focus on the 3 times where the market reached equilibrium. In his book. Wilder notes that the day this happens, it is an important date to note (on the daily chart but translates into the period of chart you’re using) as it can prove to be significant in the future too. On page 47 of his book, he reviews a key concept in his systems called the Extreme Point Rule and this is either the high or low made on the day. Depending on if you’re long, you would use the low as the stop and if you were short, you’d use the high as the stop. If not in the market, you could use this point to enter the market by placing a ‘stop’ order at this point. In reviewing these three lines, from a hindsight perspective, it’s obvious now that the markets moved in the direction you wanted but in case ‘B’ only after a considerable drawdown. And, in ‘A’ and ‘B’, potentially the same depending on your appetite for drawdowns. There are cases where the market does continue quickly in the direction of the cross but there are also times that it doesn’t immediately. This is the area I’m studying now trying to discover what conditions lead to one vs. the other. Looking at these three cases, another strategy to think about is that of placing the order at a 25-50% pullback level into the candle that caused the market equilibrium with a stop just below/above the extreme of the same day. In my next article, I’ll focus in on the markets noted above and review the daily charts YTD to see how this strategy would have played out.
OANDA:WHEATUSD
by mxb1961
1
Most EUR Pairs Forming H & S Pattern! Behold The EURCHF In my personal analytical opinion its when a H & S pattern opportunity appears, its always a great set up provided you have done thorough technical analysis!. Recently for the last few months and weeks most EUR related are forming this pattern with many eyes being on the EURUSD itself. However, we traders seek not only good technical analysis but what set up could give us a better risk to reward scenario in return. Due to many EUR pairs forming this pattern its safe to say that once the neckline is violated we need observe what pair has least resistance path which can help us achieve our take profit levels with ease! EURUSD has many supporting structure that can prevent the EUR from sliding down to the required target. In my personal analytical opinion EURCHF has the best path of least resistance and it gives a better risk to reward ratio compared to other EUR pairs. Once the weekly candle closes below the neckline, i will wait for the retest of the neckline on the weekly chart before i can enter this trade. Its a pretty high probability set up as the price has rejected the crucial resistance and the next support on the monthly time frame is present far away from the neckline of the pattern. Its an exciting analysis and it remains to be seen how the EUR pairs react in the coming week ahead. Any updates regarding the signals would be available once the criteria is met. Lastly do NOT ever underestimate the power of the EMA 21, 50, 200. Cheers have a nice day
Short
by FX618Analysis
EUR/USD Getting TighterOn the H4 chart we can see that the space is squeezing the instrument even more. EMA showing mixed dynamics and confirming the range. This is expected to continue till Tuesday when EURO GDP(Preliminar) comes out, which would push the instrument in either direction depending on the figures. Additionally, FED's Monetary Policy Statement coming out on Wednesday, and don't forget the NFP on Friday. High volatility is expected for all events so our job would be to stay calm and listen to what the market tells us. In my opinion, there will be a strong burst out of the triangle, which would be a great opportunity for some profitable trades. Highest probability trade in my view - Wait for break of either side, let it run and enter on the correction. On the upper side, we are looking to target 1.1850 area; If support is broken - target 1.1500 area. Once we have development, I will post appropriate entry points based on my strategies. Stay patient, money is coming...
by zpetrov
EURNZD Rejecting Strong Resistance Level! Reversal On The Cards? As seen from the Weekly charts the price has rejected the upper trendline on numerous occasions!. A possible break to the downside is getting more and more apparent. As noted the 50 EMA on the weekly chart can act as a strong dynamic support which lies at the 1.6700 level. This apparently could be our take profit target if the price happens to break to the downside! Now coming onto the main daily chart, it can be seen that a flat bottom structure is forming and 1.71200 is being held as a crucial support that needs to be broken in order for us to take the trade. However the daily 50 EMA is also acting as dynamic support that needs to be broken prior to this trade getting executed. Personally i would wait for the daily candle to break and close below both the support and the daily 50 EMA, followed by a retest of the 50 EMA for targeted entry. The risk reward ratio on this one is favorable as well. It remains to be seen what would happen. If at all there are any updates i will list them below. Cheers
Short
by FX618Analysis
EURAUD Weekly Chart H & S Pattern In Process!Like the EURUSD, This pair is in the process of forming a head and shoulder pattern! Once the pattern is complete a break to the downside would be on the cards. Furthermore the weekly EMA 50 would also be violated in the process thus reducing the amount of support levels in the process. Once the neckline is broken i will wait for the retest of either the weekly 50 EMA or the neckline itself before i place the trade. It might take a few weeks for the pattern to complete but its worth the wait as its a high probability pattern and the risk reward might be 1:2 or 1:3. I will update this thread later in the future shall the criteria meet.
Short
by FX618Analysis
USDJPY Weekly Trendline Violated! Chance To Go LONG The weekly long term trendline on this pair has been broken and a potential long opportunity is setting up. I am currently waiting for the channel that is forming on the 4 hour chart to break and retest the 50 EMA on 4 hr chart. Stay tuned for any updates! However i will only take this trade when i exit my other active USD position. I do not want to risk my capital buying 2 USD pair at the same time. Nevertheless its a good opportunity and if your analysis meets the criteria you can execute at your own risk!
Long
by FX618Analysis
EURJPY Bulls on the horizon? Potential LONG TradeThe Monthly chart image below shows the major resistance and support levels to look out for this pair.Currently the price is stuck between 126 and 131 levels and its looking to retest either of those levels again the coming days Looking at the Monthly charts again it can be observed that the price is confined in the long term triangle. Currently the price is being supported by the 50 EMA monthly which can act as a strong support! On the weekly chart, it can be seen that the trend is supported by the two long term trendlines. Furthermore a descending wedge was broken which adds to the list of probabilities that price is ready to go up. Now Finally onto the Daily chart, The price Must break and close above the 50 EMA for the position to be valid for long entry The Final entry criteria will be based on the 4 hour charts when the price retests the 50 EMA. When the conditions are right i will place the trade signal in the thread below.
Long
by FX618Analysis
GBP/JPY Confined In A Wedge/Flag. Potential Breakout On Horizon?Just like its parents pair (GBPUSD), The pound is just consolidating at the moment and a potential break to the upside is on the cards!. What is preventing the breakout at the moment is that the price is confined in wedge. To add to the list of confluence factors a flag has also been formed and the violation of the upper trend line would see a GBP push to the upside. The above daily GBPJPY chart represents the price being confined in a range!. A potential break to the upside would also break the dynamic resistance of 50 EMA in the process. The above monthly chart represent the potential resistance that this particular pair may face after the breakout. Furthermore, this could be our TP level as well. The risk reward ratio on this is pretty good as well. It remains to be seen what happens in the near future and what GBP related pair could give us more feasible or excellent risk to reward ratio. Any Signals will related to this post would be posted under this thread. If you like my analysis please help me with a LIKE and FOLLOW me for more future ideas and signals.
Long
by FX618Analysis
NZDUSD. Bears Struggling to close below 0.6800 Crucial Support!The Bullishness of the USD is likely to return to full strength provided if the FED keeps on track to raise the rates another two times before the year ends. NZDUSD has been taking a beating recently and for now looking at the Monthly chart, depends on where the candle closes either above or below the crucial resistance at 0.68400. If candle closes as a Doji which represents an indecison, then it would be risky to trade this pair. The Weekly chart however shows that the lower wedge trend line has been violated a few weeks back. Given the break of the this Trend line NZDUSD is showing signs of consolidation before heading for another dip. Keep in mind the direction for short on this pair depends on where the monthly candle closes and how it closes. The Daily chart shows the channel forming has been broken (not yet, depends where today's candle closes). Its a further confluence factor that NZDUSD is consolidating and will likely rise to retest the broken trendline of wedge on weekly charts. Both Fundamentally and Sentimentally NZDUSD is a SELL for now. I would personally not place any trade until i see how the monthly candle closes and the downward pressure which might occur in the coming month. at the moment i am just watching this pair closely and if the criteria for short position is met i will execute it in the near future. ANY SIGNALS ALERT WILL BE UPDATED BELOW. PLEASE IF YOU LIKE THE ANALYSIS GIVE ME A THUMBS UP AND FOLLOW ME IF YOU WOULD LIKE TO RECEIVE MORE
Short
by FX618Analysis