It is true that EMA is generally lagging, however, with the knowledge of the market structure and a combination of 8, 13, 21 EMA strategy, you will have an edge over other forex traders in the market.
Table of Contents
5 8 13 21 EMA STRATEGY
This EMA strategy is best used for the trending market, for this strategy stay away from ranging market.
This strategy gives an entry signal after the 5 EMA crosses all the other EMAs
Then once the 5 EMA crosses above the other EMA, they become support and vice versa in a bearish market.
Note that you should first look for a market structure that supports your entry.
8 13 21 EMA STRATEGY
The 8 13 21 EMA strategy gives a buy signal when the 8 EMA crosses the 13 and 21 EMA.
In this case, the Orange color is 8
DeepSkyBlue is 13
Red is 21
On a bullish trend the 13 and 21 EMA act as support
And on a bearish trend the 13 and 21 EMA as resistance.
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8 21 50 EMA STRATEGY
Just like every other EMA strategy that signals an entry when the smaller EMA crosses the big one. In this set up the 50 EMA act as major support and resistance level when a candle closes below or above the 50 EMA after a structure is completed ending a trend and starting another one.
The 8 EMA crossing; either below or above signals a strong continuous trend.
Here is an Image view for clarification.
Note: 8 EMA: White
21 EMA: Blue
50 EMA: Orange-red.
3 MOVING AVERAGE CROSSOVER STRATEGY
It is certain that as long as you use moving averages to trade, there will always be lagging unless you support your 3 moving average cross strategy with market structure, in my previous article above you will find an image view of a 3 moving average strategy (8 21 50 EMA) supported by market structure.
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8 AND 20 EMA
The 8 and 20 EMA is a simple setup strategy of only two Exponential moving averages. It is really simple, when the smaller (8 EMA) crosses the big (20 EMA) it’s an entry signal. Like I always say after a structure and a cross over then entry for either buy or sell.
NOTE: PREFERABLY ON HIGHER TIMEFRAMES for all the Moving average strategies.
RELATED: HOW TO KNOW WHEN A TREND IS ENDING?
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HOW DO YOU USE 8 AND 21 MOVING AVERAGE?
I am going to share with you a hidden secret on how to trade using 8 and 21 moving averages.
Yes, it is true that moving average lag, however, you can still catch a good market with what am going to show you.
So like I promised this is it.
The best way to use 8 and 21 simple moving average is to first look for a market structure after the 8 MA crosses the 21 MA, when you see a structure above or below then the cross-over is good to go. Below is a live market example.
Note: these market structures and cross-overs are only valid after a market trend on a higher timeframe.
WHICH EMA SHOULD I USE FOR DAY TRADING?
If you want to hear the truth about the best EMA for the day then keep reading, don’t be in a hurry to leave.
I am going straight to the point concerning this matter. I know a lot of platforms will suggest EMA use for day trading, however that will not really matter if you do not apply market structure to day trading strategy.
There are many EMA day trading strategies that are good but they should be applied with market structure analysis.
In my previous articles above you will find many EMA strategies that will suit day trading; that being said these strategies should be applied along with market structure.
WHICH EMA IS BEST FOR 15MIN CHART?
There is no best EMA for 15 min chart whatever EMA you choose will work with knowledge of market structure. However for your EMA to give a reliable market entry on 15 minutes chart these are the things you should do and look out for.
- Look out for market structure on H1 chart after a trend (chart pattern)
- Look for breakout entries on 15 minutes chart after the market structure has been completed on H1 chart.
HOW DO YOU USE THE 3 EMA STRATEGY?
I am going to give a different approach on how to use the 3 EMA strategies. There are different types of 3 EMA strategy and they are very easy to use.
Before I give you the link on how to use the 3 EMA strategy, note that you must first pay attention to the market structure at the zones of the higher timeframes for better entries; after this then you go ahead and add your 3 EMA strategy.
Here is the link to the 3 EMA strategies; 3 MOVING AVERAGE CROSSOVER STRATEGIES