4 replies to this topic

[mss]

I was asked to post my thoughts on EMA's on another site, so am sharing here also.

There are many ways to measure the Trend in relationship to "Bull or Bear" and when has it changed from one to the other. The MAIN criteria is the type of trader you are and your own risk/reward tolerance. I use several methods depending on whether it is a ST. IT. or LT. holding.

This chart is what I use to get a view of all time periods. The RSI (7) is used for the "now" view. The main chart has 55 & 89 week ema's and price is relationship viewed as to below above etc. The bottom MACD block is the momentum and trend - period strength. Notice that each time span measurement indicates trend confirmation. The crossing of (-100) to the upside is first clue, then the crossing above the "0" line is ST, IT, or LT confirmed. The longest, 55,89, is rising but has not crossed "0".



This is a monthly chart and is pretty much self explanatory. There are several confirmation indicators viewable.



This chart is a history of how the various EMAs worked time wise, and what if any, was the number of "whipsaws." Take notice of the RSI (34) as it is very telling for trend change and the relevance of OB or OS condition.



This last chart has been posted and linked so many places and is reposted here as an updated version. It is easily understood as the trend change over time periods, long term and the relationship to history.



Carl Swenlin uses several ema's, 17 & 43 weeks is one, John Murphy likes 13 & 34 ema's, I like 8 & 34 and others as charts indicate.
I do not think one is any better than the other as explained above in the opening statement. What works the best is the one you understand and have viewed the long term usefulness to your method of trading.
Comments and questions are always welcome.
mss

Edited by mss, 25 August 2009 - 08:32 AM.

[SilentOne]

hi Scott, Great charts as always. I guess the final hurdle is the 89 weekly ema. I would expect a stall at that level and if bullish, the 55 weekly ema to provide support. Some type of correction should still occur into a 40 week low so maybe that is where we see this. cheers, john

[spielchekr]

I've always found it interesting that you like to delay the ema's by 1 period. It's a subtle difference from the ema itself but a meaningful one. An ema delayed by 1 period tells you the actual crossover and flatline price for that given ema in the current period. Keep up the nice work.

[edamat]

[quote name='mss' date='Aug 25 2009, 09:30 AM' post='479678']

There are many ways to measure the Trend in relationship to "Bull or Bear" and when has it changed from one to the other. The MAIN criteria is the type of trader you are and your own risk/reward tolerance. I use several methods depending on whether it is a ST. IT. or LT. holding.

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mss: does that mean you have separate accounts, each trades with ST. IT. LT timeframes?

Thanks in advance.

[mss]

There are many ways to measure the Trend in relationship to "Bull or Bear" and when has it changed from one to the other. The MAIN criteria is the type of trader you are and your own risk/reward tolerance. I use several methods depending on whether it is a ST. IT. or LT. holding.

mss: does that mean you have separate accounts, each trades with ST. IT. LT time frames?

Thanks in advance.

Yes I do. The core account is investments for dividends and slow to moderate growth. The IT account is position trades for growth, AAPL is an example.
Trading account is several days till I get out, unless I made a mistake then I go quick.
mss