What makes it distinctive is the use of divergence analysis to further confirm the trend momentum. This strategy basically adopts the same methods as the previous strategy. Hence, a crossover between the two lines can identify the change of trend. The 3 best strategies below are therefore specially chosen as alternatives to try out:Īs an Exponential Moving Average calculated for the past 50 periods, 50 EMA serves as the short-term (fast) line to the 200 EMA's long-term (slow) line. But what about other strategies? Surely, there are others we can find especially if we're talking about an important indicator like 200 EMA. One example of the 200 EMA strategy and its key principles have been discussed in this article.
In other words, bounces and breakouts from the 200 EMA are considered great indicators of major turning points where there are huge possibilities to earn profits. The importance of 200 EMA even goes as far as affecting the market psychology since many believe that price reactions around the line are mostly significant. Price moving above the 200 EMA line would signify a bullish trend, while a movement below the 200 EMA is considered a bearish trend. Similar to its SMA counterpart, 200 EMA is typically applied in a daily chart to indicate changes in the market sentiment. One of the most commonly used EMA periods is 200 EMA. Apart from defining the predominant trend, using EMA can help traders with spotting entry and exit points, as well as setting up a plan with reliable dynamic support or resistance.
EMA itself is a trend indicator with multiple functions. Trading with the Exponential Moving Average (EMA) is commonly known among traders as there are numerous strategies that can come with it. The 3 best strategies in this article could be a start if you want to try trading with the 200 EMA. There are limitless choices of trading strategy when it comes to the reliable 200 EMA indicator.
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