The challenge for many new forex traders is to identify the overall trend on the intraday charts. The 200 Exponential Moving Average (EMA) can solve the problem for them. 200 EMA is one of the most popular technical analysis indicators amongst forex traders.
Let’s start with our simple 200 EMA Forex strategy. On your MT4 Platform, open the 4 hour, 1 hour and the 15 minutes chart and plot the 200 EMA with the red color.
Tile the 4 hour, 1 hour and the 15 minutes charts on your screen vertically so that you can view all three with ease at one glance. Now, scan the different currency pairs like the EURUSD, GBPUSD, USDJPY, USDAUD, USDNZD, USDCHF or whatever you want to trade on these three charts.
What you are looking for is a currency pair that bucks the trend on the 15 Minute Chart. Now, if the price is well above the 200 EMA on the 4 hour chart, it is well above the 200 EMA on the 1 hour chart but it is below the 200 EMA on the 15 minute chart, you have found the pair that is bucking the trend on the 15 minute chart. Suppose, this is the USD/JPY pair.
If the price action is above on the 4 hour and the 1 hour chart but below the 15 minutes chart, it means the price action is bucking the trend on smaller timeframe. Soon, it will rejoin the overall trend. Price is currently making a retracement on the 15 minutes chart so that it can rejoin the overall trend.
On the 15 minutes chart search for a suitable entry point using candlestick patterns like the hammer or the hanging man.
Practice this simple 200 EMA Forex Strategy on your demo account once or twice a day. It won’t take more than a few minutes and you will find this simple 200 EMA Forex Strategy to be very powerful.
So, in nutshell when you find the price action bucking the trend on the 15 minute chart while it is on the opposite side on both the 4 hour as well as the 1 hour chart, sit up and watch carefully to grab the opportunity to make a few pips.
Mr. Ahmad Hassam has done Masters from Harvard University. Get these 3 Swing Trading Systems FREE. Master these highly profitable Candlestick Patterns with this FREE 82 page PDF Candlestick Guide.
