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EMA TRADING Strategy

This document discusses the setup and criteria for executing pullback trades using a 30-minute chart with 10, 21, and 55 EMA lines. Specifically: 1. Both the 10 and 21 EMA must be below the 55 EMA for the setup to be valid. 2. The candle closing above the 10 EMA must have a significant body above the 10 EMA, not just a small wick. 3. The three candles prior to the crossover candle should not touch the 10 EMA, even with wicks. If these three criteria are met, the trade can be initiated on the pullback to the 10 EMA, with the 55 EMA + ATR as the initial

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640 views8 pages

EMA TRADING Strategy

This document discusses the setup and criteria for executing pullback trades using a 30-minute chart with 10, 21, and 55 EMA lines. Specifically: 1. Both the 10 and 21 EMA must be below the 55 EMA for the setup to be valid. 2. The candle closing above the 10 EMA must have a significant body above the 10 EMA, not just a small wick. 3. The three candles prior to the crossover candle should not touch the 10 EMA, even with wicks. If these three criteria are met, the trade can be initiated on the pullback to the 10 EMA, with the 55 EMA + ATR as the initial

Uploaded by

parth
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Pull back trades

Time frame on charts – 30 mins

Ema setup - 10/21/55

When the candle`s major body closes above 10 day EMA with very short wick on the higher side the
chances of stock price closing above 55 EMA are higher

BAJAJ FINANCE 30 MIN CHART

1. Here we have to see that in the above chart figure 1 cannot be used for trading pullback as the
10 & 21 EMA are above 55EMA.
2. In Figure 3 on the above chart the bullish candle has significant body above 10 EMA and unlike
fig 2 the 10 EMA & 21 EMA both are below 55 EMA.
 ATR at that point of time was 54-55 so we can keep a target of 55 EMA + ATR; in our current fig
2 (3596+56) = 3652 which had a high of 3673.
 Entry level to be considered at 10 EMA – 3554 & stoploss at 3554 – 55 = 3499
BAJAJ FINANCE 30 MIN CHART

1. Here we can see that the price has pull backed from 10 EMA to 55 EMA but it should not be
used considering the fact that the 10 & 21 EMA are not below 55 EMA.
In the above figure we need to check the below conditions for pull back trading : -

1. Both 10 & 22 EMA are below 55 EMA.


2. The 1 st candle closing above 10 EMA doesn`t have significant closing body above 10 day EMA so
the price gives pull back upto 55 EMA but never crosses the EMA.
We should avoid such type of trades instead we should look for shorting oppurtunities near 55
EMA.
Bajaj finance 30 min chart

1. Here our 1st condition gets satisfies that 10 & 22 EMA are below 55 EMA.
2. Closing body of candle is not so significant above the 10 EMA so we should avoid trading this
pull Back.
3. We should also notice that here the price retraces back below 10 EMA after touching 55 EMA
and crosses above 55 EMA in next candle. Concluding that we should not trade selling setup
when the price pulls back from 55 EMA. It simply means that this strategy is used for pull back
trading so we should us it for Buying purpose only and do not trade where condition is not in
favour.
Gap up scenario : -

1. Both 10 -22 EMA below 55 EMA


2. Siginificant candle closing above 10 EMA.

Target and stoploss for Gap trades : -

1. Entry at 10 EMA – 3476


2. Target – 22 EMA + ATR = (3486+ 28) = 3514
3. Stoploss – 10 EMA – ATR = (3476 – 28 ) = 3448
1. 10 EMA & 21 EMA below
2. 1st candle doesn’t close significantly above 10 EMA so we should avoid this trade.
3. 3 candles prior to the candle closing above 10 day EMA should not touch 10 day EMA not
even their wick
In 1st rectangle

1. 10 EMA & 21 EMA Below 55 EMA.


2. Candle closing above 10 day EMA not a significant body is above above 10 day EMA
3. 3 candles prior to the candle closing above 10 day EMA should not touch their EMA –
BREAKS
So considering above 3 factors we have not trade the 1 st rectangle.

In 2nd rectangle

1. 10 EMA & 21 EMA below 55 EMA


2. Candle closing above 10 EMA doesn’t have significant body above 10 EMA
3. 3 candles prior to the candle closing above 10 EMA should not touch their 10 EMA
Here we miss 1 chance of generating returns from the strategy but we must understand that
no strategy works 100 % in Markets.
1 10 & 21 EMA below 55 EMA
2 significant body closing above 10 EMA
3 3 candles prior to 10EMA candle doesn’t touch 10 EMA condition satisfied trade intiated
and booded profit 3486 + 26 = 3512

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