Vahid,
Do you pay any attention to the 21 EMA? My trading system is based on the 21 EMA.

No, I have never used it.

It works good for me. When a candle breaks it is a signal. Use it in conjunction with the BBM or 20 SMA. Also RSI, MACD, and Stochastic. Yes I know that is redundandant but they all must be in line to enter a trade. I am having tremendous sucesss with the 4 HR frame and good succes with the 1 HR frame. I do not really know how I saw it in the beginning but it almost acts like a S/R line. Things that keep me out of a trade are our trafitional S/R lines and the 200 SMA and 500SMA. I also use the 200 SMA and 500 SMA as profit targets when I do enter a "good" trade.

Thanks Bill

I will try it.

What stochastic setting you use?

5,3,3

hi Bill,

Would you share with us your success how you setup and trade those indicators?


Thank you!
hum

If you look at the current EUR/USD 4 HR chart a buy signal is forming. Price has been below the 21 EMA and now it is trying to break the 21 EMA. BBM is below the 21 EMA(good sign). RSI is above 50 and heading upwards(good sign) The 5,3,3 Sthocastic is heading upwards(good sign). The MACD is in negative territory(good sign) but heading up(good sign). So if this candle closes above the 21 EMA I can enter the trade and set my stop loss below this 4 HR candle. In my experience this works well on the 4 HR charts. However, I'm not sure if I will take this trade or not just because of the holidays. Markets behave strangely until the first of the year.

hi Bill,

Thank you for sharing with the live example. It is very helpful. For short position, i assume everything will be opposite?



Thanks
hum

Correct. As you see the current candle looks like it will break with a big candle. That is not always good. Some times I may enter a trade several candles later after a retrace. Still use the same SL and profit targets but get in at a better price. I also miss some trades if I wait for this to happen though. The more you watch the charts with a specific method the better feel you will get.

Thank you Bill for the extra tips!

Hi chillydog,

If I may get my oar in here, would you say that there is potentially a good sell trade forming on the EURGBP. This week is probably not the best for entering into longer term trades though.
There is a bearish candle just above the Bollinger 20MA, the 21EMA has crossed below the Bollinger 20MA, RSI is heading down to 50 and the MACD is turning down.

All the best,
aquiagora

You are correct in your observation but much must still happen. The candle has to close below the 21 EMA and the RSI be below 50. I would expect price to bounce off the 21 EMA this week if it even reaches it. It is forming its 5th consecutive bearish candle right now. A more optimum trade set up is when the MACD is showing some divergence and we may still get it down the line. On the other hand on the daily chart price may break the 21 EMA which is good even though the indicators are in no way perfect on the daily but the RSI would probably be below 50 if it does break and I place the most weight with the RSI of all the indicators. Hope this makes sense.
Bill

Thanks - your explanation makes perfect sense. In the meantime, on my pricefeed, the fifth bearish candle closed on the 21EMA at 0,89812 and the next candle is moving a few pips above, not that that means much at the moment. The weekly and daily look to be ranging.
Next week should start bringing in some good opportunities.
Regards,
aquiagora

Yes this pair is in limbo. It is bouncing around a broken support line on the daily chart and a new resistance line on the daily chart. I personally will leave this one alone for a while until maybe we can see a clearer direction. Which is probably next week.

Hi All,

Re the GBPAUD, yesterday I spotted a potential sell trade under this system on this pair and then this morning it looked good.
Unfortunately I hesitated about it and thought I was a bit too late but in the event it would still have been a straightforward +100 pip trade on a later entry.

Did anyone else who may be following this system take any trades?

Regards,
aquiagora

No I did not, I do not watch that pair. But I did take a similar position with the GBP/CHF and it is currently in the profit and moving in my direction.

Hi Bill,

Did you enter based on the H1 or H4? - I have just had a look and I see on both the pairs (GBPAUD and GBPCHF) better entries were indicated, that is RSI going below 50 and the MACD showing negative bars already on the H1.
Regards,
aquiagora

I entered at the close of the 4 HR candle that closed at 1 pm EST

hi Bill,

it seems usd-jpy meet the criteria for short at 4hour chart. Would you share with us how do you exit the trade or determine profit target?



Thank you,
hum

Yes it did fit the criteria but I did not take it because I was scared of the uptrend on the 4 HR and daily chart. Would of been a good trade though. I put my SL just above the 4 HR candle and then figure my targets just like Vahid. Say your stop loss is 40 pips. Target 1 would be 20 pips and target 2 would be 40 pips. Move SL to breakeven when it hits target 1.

If the trade is with the trend I may make the first target 40 pips and the 2nd 80 pips. I had this situation today on the GBP/CHF 4 HR chart with a SL of 75 my first target was 75 and it hit and my 2nd target is 150 and it is still open and my SL is moved to break even. If you look at it you will say it did not fit the criteria and you are right. But the 55 EMA was above the 21 EMA and both angling down and the one candle broke all 3 MA's and the indicators looked good so I took the trade. Hope this helps.

Bill