108# EMA's and RSI Forex Trading System

Submit by Joker 20/11/2012

 

Time Frame H1 or higher

Currency pairs: any

 

Indicators:

80 EMA (exponential moving average)

21 EMA (exponential moving average)

13 EMA (exponential moving average)

5 EMA  (exponential moving average)

3 EMA  (exponential moving average)

RSI (21)

Trading rules

80 EMA indicates a major trend direction. When the price goes above 80 EMA, it implies an

uptrend and if it goes opposite – downtrend.

• 21 EMA and 13 EMA give us a current trend direction.

• While 13 EMA stays above 21 EMA – uptrend occurs.

• If 13 EMA stays below 21 EMA – downtrend

• RSI (21) value is above 50 suggest an uptrend, below – downtrend

Entry Rules for long trade

We enter a long trade (buy) when

• 3 EMA crosses 5 EMA upward in an uptrend market

• Both 3 EMA and 5EMA cross a channel of 13 and 21 EMA

• RSI is above 50

• Both 21 EMA and 13 EMA are above 80 EMA

Exit Rules for long trade

We exit our trade when 3 EMA crosses below 5 EMA or RSI < 50

Entry Rules for Short Trade

We enter a short trade (sell) when

• when 3 EMA crosses 5 EMA downward in a downtrend market


• both 3 and 5 EMA cross the 13 and 21 EMA

• both 21 EMA and 13 EMA are below 80 EMA

• RSI is below 50.

Exit Rules for short trade

We exit our trade when 3 EMA crosses above 5 EMA or RSI > 50

 


Stop loss

Stop loss = 20 – 30 pips… depending on the volatility of the currency pair. For more volatile pair, like GBP/USD, stop loss = 30 pips. For less volatile pair, like EUR/USD, use stop loss of 20 pips. Next, I am going to show you a few sample trades to help you understand more clearly how to use this system

Buy Trade Example

a. EUR/USD 1 hour timeframe

 

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