MOVING AVERAGE CROSS STRATEGY
The moving average cross strategy is also referred to as the Golden Cross and Death Cross strategy.
Golden Cross happens when a short term moving average (for example, 50 Exponential Moving Average) cross above a long term moving average (either 100 Simple Moving Average or 200 Simple Moving Average) to signal a Buy trade.
Death Cross is when a short term moving average (50 Exponential Moving Average) cross over a long term moving average (either 100 Simple Moving Average or 200 Simple Moving Average) to the downside to signal a Sell trade.
However, we will be using the 13 Simple Moving Average and 50 Simple Moving Average cross for this strategy, with a combination of Momentum Indicator line cross on 100 MA and 200 MA.
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Moving Average Crossing Signals:
Moving Average Crossing (SUN 23 JUN 2019 22:10 GMT):
EURJPY 4HR CHART (THUR 6TH JUN 2019 19:19 GMT):
EURGBP 1HR CHART (WED 5TH JUN 2019 09:11 GMT):
The images below show the indicator setting for this strategy.
How it works:
Basically, when the green line on Indicator Window 1 (see image below) cross down on both the orange and blue lines, it indicates a Sell alert. However, when it cross up on the orange and blues lines, it indicates a Buy alert.
A Buy Confirmation (Golden Cross) is given when the red line cross up on the yellow line on the Main Window. This usually happens after spotting a Buy Alert on Indicator Window 1.
Sell Confirmation (Death Cross) takes place when the red line cross down on the yellow line on the Main Window shortly after a Sell Alert is spotted on Indicator Window 1.
Buy Entry point:
Technically, Buy entry point is usually identified as soon as a Buy Alert is given and a Golden Cross has occurred. A Bullish candle normally lap across the yellow line, followed by another bullish candle that opens and closes above the yellow line.
Buy trades can also be placed at the close of the second bullish candle as shown in the image below. The close of the third or fourth bullish candles may also be used as buy entry point.
Buy Take Profit Point:
Resistance levels may serve as take profit points for buy trades. Profit may also be booked at point when the red line cross down on the yellow line (Death Cross point).
Stop Loss Point:
Stop loss for Buy entry is marked at the closest support to the buy entry point.
Sell Entry point:
Sell entry point is usually identified as soon as a Sell Alert is flagged and a Death Cross has taken place. A Bearish candle normally lap across the yellow line, followed by another bearish candle that opens and closes below the yellow line.
Sell trades are placed at the close of the second bearish candle as shown in the image below. The close of the third or fourth bearish candle may also be used as sell entry point.
Sell Take Profit Point:
Support levels may serve as take profit points for sell trades. Profit may also be booked at point when the red line cross up on the yellow line (Golden Cross point).
Stop Loss Point:
Stop loss for Sell entry is marked at the closest resistant level to the sell entry point.
The position or direction of the yellow line shows the current price trend. When the yellow line is turning up, then trend is up. When the red line is also turning up at a parallel distance to the yellow line, then price can be said to be in a major uptrend.
When the yellow line is pointing downwards, then trend is down. When the red line is falling at a parallel distance to the yellow line, then price can be said to be in a major downtrend.
When the yellow line is flat, then price is in a range or consolidating phase. In a range, the red line rotates around the yellow line.
Time Frame For The Strategy:
This strategy works on any time frame. Lower time frames give short trade opportunity that may run for minutes or hours. While trades executed on higher time frames can run for days. The duration of trades on higher time frames are usually longer.
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