The EMA Channel with Supertrend strategy embodies a pure trend-following approach, combining the Supertrend indicator with a 200-period High/Low exponential moving average (EMA) channel for enhanced filtering.
The core objective of this strategy is to consistently align with the market direction, a feat achieved through the integration of the slow exponential moving average channel as a filtering mechanism. This not only ensures adherence to the prevailing trend but also amplifies the profitability of the Supertrend indicator.
Strategy Setup:
Time Frame: Recommended for 10 minutes or higher timeframes.
Currency pairs: Applicable to any pair.
Indicators
200 Exponential moving average MA (High).
200 Exponential moving average MA (Low).
Supertrend (10, 3).
Trading Rules
Trend Direction: Trade exclusively in alignment with the prevailing trend.
Uptrend Criteria: Price positioned above the 200 EMA High denotes an uptrend.
Downtrend Criteria: Price situated below the 200 EMA Low signifies a downtrend.
Buy Signal
Candle closes above the 200 EMA High.
Supertrend line located below the price.
Sell Signal
Candle closes below the 200 EMA Low.
Supertrend line positioned above the price.
Exit Strategy
Place the initial stop loss above/below the Supertrend line.
Profit target set at a ratio of 1:1.3 relative to the stop loss or upon the occurrence of an opposite signal.
This strategy encapsulates the essence of trend trading, providing clear guidelines for entering and exiting positions based on robust technical indicators. Let's delve into a few trade examples to illustrate its application.
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