High accuracy Double EMA Channel Trading with RSI Divergence and Stochastic – One of the most common trading strategies traders use along with the Double EMA tool is identifying price movements when a long-term and short-term EMA line cross.
For instance, if a trader sees that the 5-period EMA comes down and makes a crossover of the 10-period EMA, which is a bearish signal, he or she may sell long positions or take on new short positions.
Conversely, the trader enters long positions and exits short positions when the 5-period EMA crosses back up and over the 10-period.
Take a look at the image below.
The above moving average crossover examples illustrate the effectiveness of using the faster Double EMA.
This strategy is known as the Double EMA channel trading strategy, basically, because it uses two exponential moving averages to track the movement of the trend, from where traders can get in to profit from that trend.
This Double EMA Channel Trading is a trading system that it can be applied to Forex, Futures, Stocks, CFD market.
- Best TimeFrames: M30 and H1 chart for intraday trading. H4 and Daily chart for short-term swing trading.
- Most Recommended Currency Pairs: EURUSD, GBPUSD, USDJPY.
- Moving Average
- Stochastic Oscillator
- RSI Divergence
- Moving Average (5-period EMA crossed above the 10-period EMA)
- Stochastic Oscillator bullish
- RSI Divergence blue color
- Moving Average (5-period EMA crossed below the 10-period EMA)
- Stochastic Oscillator bearish
- RSI Divergence red color
This strategy performs very well in a trending market, and less so in a range-bound market.
Therefore, trades should be made as much as possible on higher time frames when it is sure that the market is trending.