Trend momentum trading with Moving
Averages and RSI is a trend following strategy. It is a simple
combination of moving averages and RSI oscillator.
Currency pairs: any currency pairs.
Time frame 30 min or higher.
Indicators setting:
EMA 5 period, close;
EMA 18 period, close;
RSI 14 period, close.
The crosses of the moving averages
generates false signals, for decrease these false signals with two
exponential moving averages lines with different periods create a
tunnel which is used to determine beginning and ending of a trend. If
the tunnel is narrow, there is a trend beginning signal. In order to
confirm this signal, Relative Strength oscillator is used.
Trading rules Trend momentum trading
with Moving Averages and RSI
Buy
EMA 5 above EMA 18 and the distance
between two EMA lines is no more than 8 points (EUR/USD 30 min time
frame to see below).
RSI above 50 level.
Long entry when the price come back on
fast EMA (retracement trading).
Sell
EMA 5 below EMA 18 and the distance
between two EMA lines is no more than 8 points (EUR/USD 30 min time
frame to see below).
Short entry when the price come back
on fast EMA (retracement trading).
RSI below 50 level.
The stop loss is optional but
recommended.
Exit position when two EMAs crossed
again or with predetermined target profit.
Exmples distance between two MA (11
period and 21 period): EUR/USD 30 min 7 pips, 60 min 10 pips -
GBP/USD 30 min 8 pips, 60 min 11 pips – USD/JPY 30 min 7 pips, 60
min 10 pips.
In this strategy there are two important
concepts for trading: retracement of the price and distance between EMAs.
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