34 EMA With Trendline Break Forex Swing Trading Strategy

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34 EMA With Trendline Break Forex Swing Trading Strategy

This swing trading strategy is easy to use and can give you good gains. This system uses a 34 EMA or exponential moving average to identify a trend direction of the market.

The rule in this strategy is trades are taken after the break of every trendline. The only indicator that you will use is 34 EMA. Use a 1-hour or higher timeframe in this method in order this to be effective.

Buy Rules:

  1. There must be a downward trendline.
  2. The price must be above the 34 EMA.
  3. The high of the candlestick must form after the downward trendline breakout.
  4. Place a buy stop order  a few pips above the high of the signal candlestick or enter at the market price. The signal candlestick is the candlestick with a high that is lower than the previous candlestick’s high.
  5. If your buy stop order is not executed and the candlesticks continue to make lower highs, move your buy stop order to each lower high candlestick that forms until price moves up and activates your order.
  6. Place your stop loss below the low of the candlestick.

Sell Entry:

  1. There must be an upward trendline.
  2. The price must be below the 34 EMA.
  3. The low of the candlestick must form after the downward trendline breakout.
  4. Place a sell stop order a few pips below the low of the signal candlestick or buy immediately at the market price. The signal candlestick is the candlestick with a high that is lower than the previous candlestick’s high.
  5. If your buy stop order is not executed and the candlesticks continue to make lower highs, move your buy stop order to each lower high candlestick that forms until price moves up and activates your order.
  6. Place your stop loss below the low of the candlestick.

Target Profit Options:

  • Take profit at the level when profit is 3 times what you risked initially.
  • 80-250 pips if trading on a daily chart and 40-120 pips for the 4-hour chart.
  • Take profit at the previous swing high or low
  • Trade Management:
  • Lock in profits by moving stop loss if the market in in your favor.
  • Trail the stop behind every candlestick if you are trading on a daily and 4-hour chart.

Advantages:

  • Allows you to trade with the trend
  • Use of price action and trendlines to enter your trades
  • The trend is changing during trendline breakouts with the help of the 34 EMA.

Disadvantages:

  • There are times that swing points are hard to fine for you to draw the trendlines.
  • False signals can occur on a ranging and sideways market.

Additional Trade Entry Techniques:

The use of bullish and reversal candlesticks can be used as your “signal” candlestick to buy or sell.

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