Distivot Point Strategy With EMA

The MA indicator is one of the most highly used technical indicators in the Forex Market. There is a lot of different strategies that can be employed when you use this indicator on the chart. The one I employ is a 2-step MA strategy which uses the 50 EMA as one of the input points, the 20-period EMA as the second input point and then a traditional drawing of a line from A to B.

The strategy works off of the 50 EMA being hit in two phases.

For phase one, from EMA0 to EMA50There is a draw on the chart plotting these two lines as if they were equal.

For phase two, from EMA50 to EMA70There is a draw on the chart plotting these two lines as if they were equal.

There is an interesting algorithm for drawing these lines. To utilize this strategy in your account you have to draw the lines as shown on the chart, but you can just imagine that the plot will look like this:

EMA This is phase one.

MA This is phase 2.

When the 50 EMA (5) crosses over the 20 EMA, this is a sign of an upward market. You can also use the fact that the MA crosses over the 50 EMA (5) and use that same logic for a downward market.

You should also notice that the MA always crosses over the last candle #H4.

In the example of EMA50 to EMA70, the MA readily moves above the 50 EMA. We would have to look at facts such as other means for entering a market or finding another way in which to enter a market. This would change the direction of the prices.

One of the more popular ways of using the one above is in the following scenario (these two charts are from April 18):

millionaires and Fortune 500 corporations buy precious metals such as gold and silver.

This action causes the prices of those metals to be whispered upward versus rising prices.

Five months back this strategy might have been a little oversimplified.

However, after observing the market for a while there is one thing that I have noticed.

I have noticed that this strategy is more profitable with the market moving up.

When I am in my notebook writing this I can observe the following fix.

  1. I allow myself to stay up for 30 minutes an hour.
  2. I don’t study or read financial emails or any kind of material.
  3. I am someone who is naturally comfortable trading with numbers and formulas.

I make it a habit to draw lines on my charts with a wide grid in the upper and lower margin.

also notice how after a little bit of time, when the lines cross, we enter the market in an upward direction and the market accelerates higher in each period

Any time that the market moves higher up, more up movement is tended to move up into the higher timeframes.

When the market moves low, more time is encompassed between the lines as well as an upward move.

You have to think about this logically.

When you are waiting for a bearish move, you place yourself in a position where you can watch for that move to move downward.

And then draw a line through the low line, horizon and the area between the lows.

All the previous steps that I have explained to you are what create an upward position.

So with this strategy at your disposal, you can watch for the market to move higher and when it does, you can be in the market with the bulls.

This particular strategy works with daily and four-hour charts.

On the five minute charts, it does not work because there is no momentum (upwards or downward Reversals) on these short term charts.

On the longer-term charts, you can see how the MA works after it is employed on the higher timeframes.

You have to understand that when market prices move quickly, the MA is not factored into the pricing.

Therefore, you will see the authenticity that will follow after the price movement is prevented.

Disregard the one that says it is 100-300 pips.

I am pretty sure that you see a price pattern is created on a daily chart.

You need to understand that certain price patterns, which in Technical Analysis are called MA Probabilities, will be progressive from the 400 to the 700 level retracements, at which point, the price will start to reverse from its earlier direction.

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