![]() Since we see that trend lines show a rhythm to the market, and when that rhythm finally breaks, we can combine it with the moving average for trend direction and entry trigger. However, often times traders will use a close above/below a trend line for trend direction.Ĭombining the 34 EMA + Trendlines For A Trading Strategy Price breaks above and below the moving average several times and that is not a way you’d want to trade it. You can see the slope showing downtrend, uptrend, and a flat moving average that will either show a market in trend transition or a trading range. This is just a medium length moving average and one that I have used in the CCI trading strategy. I don’t want you going down the moving average rabbit hole looking for best settings for the moving average. That’s is all you really need to know about trendlines in the context we are going to use them. This line will break before the long term and that just puts me on alert of a potential change in market state.īreak above/below long term line is a change of trend to be confirmed with price action For my rules, I have be able to connect the last swing into lows/highs. The red line connects the final swing into the low. This is the longer term line and indicates the prevailing trend long term. On the left, we have a downwards trendline that connects the peaks of price. For a more in-depth review of drawing trendlines, you can review the article: Define Your Trend Line Drawing Rules This is not a complete trendline tutorial. When price action begins to break from through the trendlines, we are seeing a change in the rhythm and balance of power shift. Trendlines are a good tool to find the rhythm of the market. This 34 EMA trading strategy not only uses an exponential moving average, but also includes trend lines. ![]() If we break down what we are looking for in a strategy, it is simply: the probability of one thing happening over another. In fact, when you have too many moving parts in a strategy, it’s difficult to make adjustments or even just test it. ![]() Your trading strategy does not have to be complex.
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