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TA Challenge: How do you identify trends with moving averages?
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Investing 101 joined discussion · Mar 15, 2022 16:32

Using the EMA

How are some of the ways I use the EMA?
I often use the EMA to check of existing trend and also to give me a dynamic support/resistance to open a position.
EMA is often used by me as when I'm doing Day trading or swing trading. I use it on the all time frames from the 1min up to the daily, weekly and monthly charts. I will show you some examples on the futures chart as you can see below $E-mini NASDAQ 100 Futures(MAR5) (NQmain.US)$

How to use it for Day trading:
Using the EMA
You can see the orange line which is my 55EMA and pink line which is my 233EMA.
I use the 233EMA to see the trend and the 55EMA as a guide for a pullback to open positions.

Example:
When the price is above my 233EMA, the trend is upwards. which means I would open a long position everytime it pulls back to the 55EMA. And opposite of that if the price is below the 233EMA, the direction of the trend is downwards. which means a short position will be opened when it retests the 55EMA.

so through the chart above, you can see it is below the 233EMA which means the trend is down. and everytime it retests the 55EMA, you can short it and it will be a high probability winning trade. Stop losses can be placed slightly above the 55EMA and take profit can be 3x or 4x of your risk.

On a larger timeframe chart, the same is applied. Only that the trend is not for the day but could be for days and weeks ahead.

How I use it for Swing trading:
$E-mini NASDAQ 100 Futures(MAR5) (NQmain.US)$
Using the EMA
The above chart is for the 2H NQ. So I use the 2H and 4H chart to predict the movement of the week. How so? When the price is below the 233EMA and it goes up to retest the 55EMA and fails to break above with a strong bullish candle, it could mean the price will stay bearish for the next few days. That will give me an indication of what to expect the next few days or even the entire week. That can help set your bias so you will be able to plan out for swing trades to capture the larger move.

And if the price breaks above the 55EMA, I would close out my shorts and wait for it to cross the 233EMA to signify a change of trend for the next few days.

This are some of the ways to use the EMA to identify trends and also to give you places to open your trades.

As always trade safe and invest wise!
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