EMA, The correct way of usage - Part One
In ARZ Trading System, we use multiple EMAs to analyze the market, as follows:
1. 200EMA, 100EMA, & 50EMA: Analyze the big picture (Major Structure). What is happening in higher timeframes? Long Term Bulls are stronger or Bears?
2. 20EMA, & 13EMA: Analyze the trading timeframe (minor structure). When to enter a trade and how to manage it? Short Term Bulls are stronger or Bears?
Points to consider:
1. If an EMA is flat, it's not a valid S&R and we expect the price to break it easily. If not, it'll act as a strong S&R and we expect a strong movement after Pullback on it.
2. Based on the period of Flat EMA, the fluctuation around it could be big and bigger. It means, a flat 20EMA has a smaller range of fluctuation and shorter duration of ranging market around it, in compare to 200EMA which generally is wider and longer.
3. If EMAs are close to each other, cannot act as S&R. Only when there is some distance between them we can see them as S&R that can encapsulate price between them for a period of time.
Here we see a strong bullish entry after hitting Flat 200EMA and 50% LTP. If cross and closed above all EMAs, a Pump is in hand!
To be continued...
1. 200EMA, 100EMA, & 50EMA: Analyze the big picture (Major Structure). What is happening in higher timeframes? Long Term Bulls are stronger or Bears?
2. 20EMA, & 13EMA: Analyze the trading timeframe (minor structure). When to enter a trade and how to manage it? Short Term Bulls are stronger or Bears?
Points to consider:
1. If an EMA is flat, it's not a valid S&R and we expect the price to break it easily. If not, it'll act as a strong S&R and we expect a strong movement after Pullback on it.
2. Based on the period of Flat EMA, the fluctuation around it could be big and bigger. It means, a flat 20EMA has a smaller range of fluctuation and shorter duration of ranging market around it, in compare to 200EMA which generally is wider and longer.
3. If EMAs are close to each other, cannot act as S&R. Only when there is some distance between them we can see them as S&R that can encapsulate price between them for a period of time.
Here we see a strong bullish entry after hitting Flat 200EMA and 50% LTP. If cross and closed above all EMAs, a Pump is in hand!
To be continued...
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