UPDATE ====>>》》Trade Closed for +7 Pips.
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Chart shows test of EMA and rejection and that also was previous swing. Price started to consume the sell orders and also keep checking the demand with the test of EMA. At the time of entering price pullback to check the strength of trend & post strong bullish candle and the test of orders at this candle was reason to find bulls again.
Hi Readers,
I have been testing a system based on price action support resistance to trade for Intraday scalping & result of previous couple of days are quite encouraging. I've practice on more than hundred of mechanical systems in my trading career of over 9 years but non of them is profitable except couple of them which I've shared with you earlier & I would like to share the antanomy of trading forex with EMA. h3 What is EMA & why support and resistance is important to filter trades.First of all, I would like to tell you that EMA is the average price of past number of candles and its concept quite vague without the help of price action & support and resistance. Ema actually is used differently for different pairs as different pairs react differently on EMA settings for different period so you should always check back history with different EMA settings to see which settings should be used for a pair which is trending.
While trading EMA one need to make sure to use technical indicators like trendline, candlesticks & accurately mark support and resistance on two time frames higher than time frame you are trading. Marking support and resistance is important to set stops and targets as without its use you cannot develop any profitable strategies no matter how accurate systems you developed.
Chart I posted above is gbp/usd chart, and EMAN settings I used for this chart is (72,20) SMA to close. This is a perfect example of how PA should hold when trend is picked up. There are arrow marked when EMA reject the low values and EMA is providng strong value and value shifts higher. There was one break below EMA which was yesterday and immediately after that close we saw a strong outside bullish bar to reverse the prices higher again clean and high probability trade came when US market was about to take over London market.
When market test the EMA we already had breakout of a bullish flag & that time we were entering the most productive market session and target was daily high at 1.3438 & entry came at 1.3385 which was above the yesterday. If you move down to m5 chart you would see the outside bullish bar contained 13 pips, which breaks above a falling trendline and that was our entry point. You can easily set your stops below the swing low of that rejection or few pips below yesterday high and get good reward for your scalping trade & that is how price action with support and resistance should be traded with the help of EMA.For Intraday scalping in Currency trading, one should always look to use pivots or good support and resistance or fibonacci tool or trendline if it is providing good support and resistance. Always look to trade logic with good risk reward. Although I don't consider this method a completely one dimension mechanical system but still aim for good rewarding trade increase the probabability & help in money management calculation.
I would keep updating the blog for next few days with some scalp on different pairs and would also update you if there is any other filter that can be used with this power combination of EMA price action support and resistance method.
