This is a trend-following system based
on the use of several indicators; two EMAs (Exponential Moving
Averages), and the MACD (Moving Average Convergence Divergence). I
will

also be using the Fibonacci Retracement
tool to help determine support and The EMAs are used as opposed to
the SMAs (Simple Moving Average) because I feel it provides a faster
reaction to the trend. There are three main representations of the
MACD; the “One-lined” MACD, which has one line overlaying the
histogram; the “Two-lined” MACD, which depicts two lines
overlaying the histogram; and the OsMA (short for Oscillator of the
Moving Average), which displays only the histogram. In this system,
we will use the two lined MACD. On the 1-hour chart, this system
requires the use of the two lines of the MACD to help determine the
trend, but on 5-minute chart, it only uses the Histogram. We’ll add
the 7 EMA, 13 EMA and MACD (we’ll use the default settings for MACD
- 12, 26, 9). 7 EMA and 13 EMA Settings:

I. Period: 7 and 13

II. Shift: 0

III. MA Method: Exponential

IV. Apply to: Close.

Find your most recent swing points to
draw your Fibonacci.**Trading rules Two line MACD with EMA's**

**Long Trades**

1. The 7 EMA needs
to be above the 13 EMA on the 1 hour chart.

2. MACD should be
crossed over to the up side on the 1 hour chart.

3. Find your most
recent swing points and draw your Fibonacci

retracement. Wait
for price to retrace to at least the 38.2% retracement

level and no more
than the 78.6% retracement level on the 1 hour chart.

4. Go to your 5
min chart for entry. Ensure at least one candle on the

M5 timeframe
closes below the 38.2% Fibonacci retracement level. Wait

until the MACD
Histogram forms a new bar above the zero line, then

enter the market
with a buy trade at the close of that candle.

5. Stops and
limits can be based on previous swing highs and lows on

the five minute or
hourly charts. I personally use a 15 to 20 pip stop

based on my entry
point. You have to decide this based on your own

risk/reward
tolerance. Never risk more than what you see as your profit

potential.

**Short Trades**

1. The 7 EMA needs
to be below the 13 EMA on the 1 hour chart.

2. MACD should be
crossed to the down side on the 1 hour chart.

3. Find your most
recent swing points and draw your Fibonacci

retracement. Wait
for price to retrace to at least the 38.2% retracement

level and no more
than the 78.6% retracement level on the 1 hour chart.

4. Go to your 5
min chart for entry. Ensure at least one candle on the

M5 timeframe
closes above the 38.2% Fibonacci retracement level. Wait

until the MACD
Histogram forms a new bar below the zero line, then

enter the market
with a sell trade at the close of that candle.

5. Stops and
limits can be based on previous swing highs and lows on

the five minute or
hourly charts. I personally use a 15 to 20 pip stop

based on my entry
point. You have to decide this based on your own

risk/reward
tolerance. Never risk more than what you see as your profit

potential.

**Fibonacci Retracement**

After you have
determined your trend as depicted by the EMAs and the MACD,

you want to look
for your most recent swing points (swing-highs & swing-

lows). A
swing-high is the highest point of the highest candle in a price

movement. A
swing-low is the lowest point of the lowest candle or bar in a

price movement. In
other words, a swing-high candle must be preceded by a

candle that has
its high point lower AND the subsequent candle must also

have its high
point lower. Conversely, the swing-low candle must be preceded

by a candle that
has its low point higher AND the subsequent candle must also

have its low point
higher. The Fibonacci tool is then used to determine a higher

probability
retracement once the swing-low and swing-high are established. A

A few candles
earlier from the chart above, we see that the EMAs came into

bullish alignment,
as well, however, once the Fib tool was applied to the chart,

we see that the
market continued to retrace beyond the 78% level nullifying

the move as seen
below:However, as we patiently waited for market movement, we see that the bullish

trend reaffirmed
(EMAs and MACD re-aligned) and subsequently retraced to

an appropriate
level:

The 7 EMA is below the 13 EMA. The MACD is crossed down at point (A). All

At point C the histogram has gone below the zero line. At point D enter short

The 1 Hour chart

The 7 EMA is below the 13 EMA. The MACD is crossed down at point (A). All

At point C the histogram is above the zero line. At point D enter long at the

**Entry**
Once the
requirements for determining the trend have been satisfied on the

1-hour chart, I
drop down to the 5-minute chart to pin-point my entry. Only

the MACD Histogram
is used at this time. When a histogram bar pops up from

below the zero
line, this signals a bullish entry. A bearish entry is confirmed

when a histogram
bar appears below the zero. Also, please take note, in my

videos, I often
times refer to the “zero line” as the “water line”.

Remember, the
1-hour chart is used to determine the trend,

and only the 5-min
chart is used for the actual entries.

Below is an
example of a 5-min entry signal:

**Short/Sell Trade Examples**
EURUSD

The 1 Hour ChartThe 7 EMA is below the 13 EMA. The MACD is crossed down at point (A). All

points are marked
on the chart. Find your most recent swing points to

measure your Fib
retracement from. I have drawn my Fib Line using the most

recent swing
points.

Price has retraced
above 50% and

**The 5 Min Chart**

At point C the histogram has gone below the zero line. At point D enter short

at the close of
that candle, because the histogram has gone below the zero

line. Point D
marks the entry. Your limit can be the previous swing low on the

1 hour chart or a
pivot point. Your stop can be a previous swing high on the 1

hour chart or a
pivot point. You have to decide that based on your risk vs.

your reward. Price
fell over 100 pips.

**Buy/Long Trade Examples**

**GBPUSD**

The 7 EMA is below the 13 EMA. The MACD is crossed down at point (A). All

points are marked
on the chart. Find your most recent swing points to

measure your Fib
retracement from. I have drawn my Fib Line using the most

recent swing
points.

Price has retraced
above 50% At point C the histogram is above the zero line. At point D enter long at the

close of that
candle, because the histogram is above the zero line. The arrow

at point D marks
the entry. Your limit can be the previous swing high on the

1 hour chart or a
pivot point. You have to decide that based on risk vs. reward.

Price went up over
100 pips.

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