EMA-ZIGZAG Trading: How Banks Always Win & How YOU Can Too! (Forex-Stocks-Crypto Trading)

EMA-ZIGZAG Trading Strategy. Here’s the deal—the safest, most profitable, and highest-potential trades come from trend-following strategies. That means we’re not trying to fight the market—we’re going with the flow, riding the momentum that’s already there.

Now, for this strategy, we’re using three key Moving Averages:

• ✅ 100-period EMA
• ✅ 34-period EMA
• ✅ 5-period EMA

So, how do we read them? Well, I’m pretty sure you already know how to interpret a three-MA setup like this. But let’s make it crystal clear:

• 📈 If the 34-period EMA is above the 100-period EMA, the market is in a BULLISH trend.
• 📉 If the 34-period EMA is below the 100-period EMA, the market is in a BEARISH trend.
• 🎯 And the 5-period EMA? That’s our entry signal indicator—our trigger to jump into the trade!

I know many of you are already familiar with these Moving Average rules. But if you’re not 100% confident yet, don’t worry! I’ll walk you through a real-case example to break it down step by step—so you can fully master this fundamental trading rule.

1. Take a look at this chart.

It’s crystal clear—the 34-period EMA is above the 100-period EMA, and both lines are pointing upward. What does that tell us? We’re in an UPTREND. The market is BULLISH.

2. Take a look at this chart.

It’s crystal clear—the 34-period EMA is below the 100-period EMA, and both lines are pointing downward. What does that tell us? We’re in a DOWNTREND. The market is BULLISH.

Sounds simple, right? But hold on—this is just the basic rule. You can’t just enter the market every time this happens, or you’ll put your trading capital at serious risk. We need filters and additional conditions to confirm high-quality signals.

And that’s exactly what we’re going to cover next—so you can trade smarter, not riskier!

In this strategy, we’re using the Zig-Zag Indicator—and let me tell you, with the right settings, even if you’re a beginner, you can EASILY identify the current market structure. And this is HUGE because market structure plays a critical role in achieving high-accuracy entry signals. In fact, since we base part of our market analysis on structure, our entry probability skyrockets compared to just relying on signal confirmation alone.

Now, let’s break it down. Here’s the fundamental principle of market structure:

• 🚨 BEARISH MARKET:

The sequence is High, Low, Lower High, Lower Low, Lower High, and Lower Low. When you see this pattern forming, the market is clearly in a downtrend.

Take a look at this chart—you can clearly see that the market is in a short-term bullish trend. It’s obvious, undeniable, and right in front of us.

So, let’s dive into our analysis right here.

First, we examine the market structure that has formed. To do that, we’re using the Zig-Zag indicator.

And look at what it reveals—the market is moving in a well-defined, readable pattern. This is a strong early sign that any trading signal forming here has a high probability of accuracy.

Now, let’s break it down—you can see this Low, followed by a Higher Low, and then another Higher Low. The market is forming clear, structured waves, making it incredibly easy to read. That’s exactly what we want, right?

But here’s the key—if the Zig-Zag indicator isn’t clearly mapping out the market structure, you shouldn’t force it. Instead, move on and find a market where the Zig-Zag can accurately define the structure—just like I’m showing you here.

• 📈 BULLISH MARKET:

The sequence is Low, High, Higher Low, Higher High, Higher Low, and Higher High. Spot this structure? That means the market is in an uptrend.

This is the correct way to analyze market structure, and mastering this will be a game-changer for your trading journey. Understanding market structure is crucial—you’ll need this skill every time you analyze price movements.

Now, I assume you’ve fully grasped trend analysis using Moving Averages and market structure. So let’s take things to the next level—it’s time to break down market analysis using the CCI Indicator! Let’s go! 🔥

First, we examine the market structure that has formed. To do that, we’re using the Zig-Zag indicator.

And look at what it reveals—the market is moving in a well-defined, readable pattern. This is a strong early sign that any trading signal forming here has a high probability of accuracy.

Now, we move on to the next step—analyzing Moving Averages, specifically the 34-period EMA and the 100-period EMA.

Right here, we see a critical confirmation—the 34-period EMA has just crossed above the 100-period EMA. And that? That’s our second confirmation that the market is officially in a bullish trend.

As I’ve mentioned before, the 100-period EMA is one of the most widely used EMAs among professional analysts. That’s why support and resistance levels based on the 100 EMA are so important—it reflects the collective sentiment of the most influential traders and institutions who drive the market.

Then we have the 34-period EMA, which serves as a key reference point for short-term trend reversals. Why 34? Because this period reacts exceptionally well to price movements, making it a highly effective dynamic level.

Now, here’s where it gets interesting—when we combine the 34-period EMA with the 100-period EMA, guess what? The 50-period EMA naturally falls right in between. And that’s huge! The 50 EMA is another favorite among institutional traders and market makers, making the space between 34 and 100 EMAs a highly significant trading zone.

Think of this zone like the Kumo cloud in Ichimoku, but with a different configuration—one that’s rooted in the trading psychology of dominant market participants. This strategic EMA setup helps us align with the major forces shaping market trends and gives us a clear edge in spotting high-probability trades.

CCI SIGNALS

Since we’re in a bullish market, the area between the 100-period EMA and the 34-period EMA acts as a strong support zone. And what are we waiting for? We want to see this bullish market enter a phase of exhaustion, pulling back down into this strong support area—right between the 100 EMA and the 34 EMA.

And look at this chart—exactly that is happening! The price has dropped right into this key support zone, signaling that this bullish trend is temporarily weakening. The market has been pushing higher, but now we’re seeing a healthy retracement into this critical support level.

So, does this mean we should jump in and place a BUY trade immediately? Not yet. This setup alone isn’t enough to confirm a high-probability entry—we need one more key confirmation before we act.

That confirmation comes from the CCI indicator. If the CCI line is below -100, it tells us that this price drop has stretched low enough into the support zone. And if we then get a BUY signal, that’s exactly the kind of high-probability trade we want—because what happens next? The price often skyrockets, offering maximum profit potential with minimal stop-loss risk.

Now, the big question—when is the perfect moment to execute the BUY trade?

The answer: as soon as the CCI line moves up from below -100 to above 50, or even better, above +100. Just like in this example, once the CCI starts rising, we immediately pull the trigger on the BUY entry at the open of the next candle.

Where Should You Place Your Stop Loss?

This strategy identifies two optimal stop-loss levels:

1️⃣ Below the nearest swing low
2️⃣ Below the 100-period EMA

In this case, we’re placing the stop loss below the 100-period EMA—why? Because this is the furthest recommended stop-loss level based on this strategy. And even though it’s the widest stop placement, it’s still within a reasonable distance, keeping our risk controlled and manageable.

 

Since we’re dealing with a bearish market, the area between the 100-period EMA and the 34-period EMA acts as a strong resistance zone. And what are we waiting for? We want to see this bearish market enter a phase of exhaustion, pushing prices back up into this resistance area—right between the 100 EMA and the 34 EMA.

And look at this chart—exactly that is happening!

The price has climbed up into the resistance zone, signaling that this bearish trend is temporarily weakening. The market has been selling off for a while, and now we’re seeing a pullback into this key resistance area.

So, does this mean we should jump in and place a SELL trade right away? Not yet. This setup alone isn’t enough to confirm a high-probability entry—we need one more key confirmation before we act.

That confirmation comes from the CCI indicator. If the CCI line is above +100, it tells us that this price rally has stretched high enough into the resistance zone. And if we then get a SELL signal, that’s exactly the kind of high-probability trade we want—because what happens next? The price often plunges deep, offering maximum profit potential with minimal stop-loss risk.

Now, the big question—when is the perfect moment to execute the SELL trade?

The answer: as soon as the CCI line drops from above +100 down below 50, or even better, below -100. Just like in this example, once the CCI starts dropping, we immediately pull the trigger on the SELL entry at the open of the next candle.

So, where’s the best place to set your Stop Loss? This strategy identifies two optimal locations:

1️⃣ Above the nearest swing high
2️⃣ Above the 100-period EMA

In this case, we’re placing our Stop Loss above the nearest swing high—why? Because it’s not too far from our entry, yet still gives enough breathing room for price action to continue its bearish trend.

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