MY ORBEX PARTNERS AREA FUND ACCOUNT FAQS

GMT 04:41AM Cyprus 07:41AM London 05:41AM Beijing 12:41PM New York 12:41AM live support Request a callback

HOME WEB TV TECHNICAL ANALYSIS FUNDAMENTAL ANALYSIS FOREX LIBRARY ARTICLES WRITE FOR US ORBEX WEBSITE

Trading With The 200 And 50 EMA: H4 Time Frame Trading Strategy

WEB TV VIEW ALL

Tune in to Orbex Web TV, for all market news, analyses,

fundamental & technical reports. Watch our broadcasts hosted
by Nour Eldeen Al-Hammouri covering forex, commodities, and
indices in addition to exclusive CFD and forex trading
opportunities identified by the Orbex research team.

Orbex Market Insights - July 10

For traders looking for a trend following strategy, there is nothing better and simpler than using the moving
average. One of the commonly used indicator, the moving averages form the basis for many different trend
following strategies.

In this trading strategy, we make use of the 200 and 50 periods exponential moving average applied to the
4-hour charts. This strategy does not rely on the moving average cross over but rather enters the trend after it
is established and exits on a quick profit.

Indicators used and their purpose

200 EMA applied to closing prices on the H4 charts: This forms the main basis of our bias. Because the H4
chart interval closely follows the daily charts, trends are well reflected in this time frame.

50 EMA applied to closing prices on the H4 charts: This moving average will be the key towards managing
risks in our trade.

The chart below shows the set up for this strategy. RELATED

Once the chart is set up, we look for the following criteria:

Sell Bias: 50 EMA must have recently crossed over below the 200 EMA How to use the ADX indicator to improve
your trading?
Buy Bias: 50 EMA must have recently crossed over above the 200 EMA The ADX or the Average Directional Index indicator
is a handy tool that can help traders in a number
If either of the conditions is met, we then wait for the following set up to appear:
of ways. For the most part, []
Sell Criteria

Price must be trading at or below the 50 EMA

Price must make a low and then retrace back to make a high, contained within the 200 and 50 EMA
Using the horizontal line tool, mark the low point before retracement
Once price breaks this low, wait until a new low is made and price starts to retrace again
Place a sell order at the previous low with stops above the low at the most visible intermediary high
Measure the distance of the high to the low and project the distance 1.5 times from entry

The chart below illustrates how the sell trade set up is identified.
Questions You Need To Ask Yourself Before
You Enter A Trade
There are many different approaches to trading.
From technical signals given by the indicators to
the fundamentals that become the driving force in
the asset []

1. Price makes a new low at 0.84088 below the 50 EMA and then retraces back to the 50 EMA making a
new high at 0.85148
2. We now project our targets. BE Target = High Low (85148 0.84088 = 0.0106). So BE target would be
Low (or entry) distance (0.0106), which is 0.84088 0.0106 = 0.83028. We now calculate the final
target which is 0.0106 x 1.5 = 0.0159. Projecting this from the possible entry of 0.84088, the final target
we get is 0.82498
Previous: How to use the Bollinger Bands Next: Combining Fundamental & Technical Analysis FUNDAMENTAL ANALYSIS
Indicator

3. Price then drops below the previous low and declines further to make a new low.
Aussie & Kiwi: Bearish Outlook
4. We now place a sell order at the previous low of 0.84088, with break even target of 0.8028 and the final
target at 0.82498 Remains
5. Stops are placed at the visible high at 0.84652
6. Overall, this trade has a 1:2.8 RR

Buy Criteria

Price must be trading at or above the 50 EMA

Price must make a high and then retrace back to make a low but stay above the 50 or 200 EMA
Using the horizontal line tool, mark the high point before the retracement low
Once price breaks the high, wait for a new high to be made and price starts to retrace back to the
previous high 10 | Jul | 2017

Place a buy order at the previous high with stops at the most visible low A few weeks ago, we took a detailed look from a
technical point of view at the two interesting pairs.
Measure the distance of the high to low and project the distance 1.5 times from entry We speculated the possible scenarios, []

The chart below illustrates how the buy trade set up is identified.
Like Share 2 people like this. Sign Up to see
what your friends like.

ARTICLES view all

1. In the above chart, price makes a high at 1.09461, above the 50 and 200 EMA and then drops to make a
new low at 1.08422
2. Price then rallies breaking above the previous high to make a new high and retraces back towards the
previous high, which marks the buy order entry.
3. Stops are placed at the previous low as it is the only visible stop level that we can see.
4. From entry, the projected target is 1.5 times the distance of entry to the low (which is also where the
stops are placed).
5. When price travels the same distance as the entry to the low price, the trade is moved to break even or Inside the Forex Forex Affiliate
closed partially, with the final target in place Market: Searching Guide: How to Define
for Black Swans? Your Target
The advantage of using this trading strategy can be summarized into the following: Audience
What is a Black Swan?
Using the two moving averages and entering after the trend is established offers a low risk trading The term was made Finding your target
strategy popular [...] audience can be a
tough wall t[...]
The in-built risk management means that all the trades come with a minimum of 1:2 risk/reward trading
strategy
Because the strategy is based off H4 chart interval, the average holding period for the trades can be
between a few days to a week at the most
The trading strategy is very objective but requires a bit of practice to identify the trade set ups

The disadvantage of using this trading strategy includes:

Trade set ups do not occur that frequently, so traders looking for make quick trades will find this as a
disadvantage
Sometimes, despite all the criteria being met, price does not retrace and continues to rally, which could
result in a missed opportunity. Impulsive traders will find such scenarios very tempting to jump into the
trade, ignoring the rules Inside The Forex Forex Affiliate FAQ:
Market: Famous Fat Your Questions
Finger Trades & Answered
Flash Crashes The sum total of every
Orbex
Efficient Markets? Fat Forex Affiliate FAQ
finger trades & flash youve [...]
More Posts - Website
c[...]
Follow Me:

INFOGRAPHICS

12 15

Comments
5 comments on Trading with the 200 and 50 EMA: H4 Time frame Trading Strategy

Jason
December 12, 2016 at 6:44 pm
Level of impact news have on the strategy
MMaajjoorr EEccoonnoom miicc EEvveennttss 22001166:: W
Whhaatt
MMoovveedd tthhee M Maarrkkeettss TThhiiss YYeeaarr??
Will news theought the days/weeks have an impact on the trend of the [[IInnffooggrraapphhiiccss]]
given pair ? Will the impact of the news slow down or even reverse the
trend ? Please advise.Thank you very much for your expertise !
Reply

James Harte
December 12, 2016 at 7:39 pm
Hi Jason,

News will certainly impact relevant currency pairs and dependant on the
release can either disrupt or advance the trend.
Reply
 For example, if we have a bearish EURUSD trend and we have a negative
EuoZone data release this will likely speed up the trend.

Similarly, if we have strong US data this again will likely speed up the trend
(as it will weigh on EURUSD)

To remain safe, look to only take news based trades where they align with
the trend.

Kind regards

BBRREEXXIITT:: TThheenn,, N
Noow
w,, AAfftteerr

Jason
December 13, 2016 at 8:20 pm
Hi James,

Thank you very much for the prompt reply.I find your article very
useful.The explanation given to my question was well answered.Im
currently testing the strategy on AUD/NZD bearish trend set up.Hope
I set up correctly.

Best regards,
Jason
Reply

James Harte
January 18, 2017 at 11:51 am
Hi Jason,

Glad you found my answer helpful. Hope your trade worked out for
you.

All the best,

James
Reply

Tom
January 18, 2017 at 2:16 am
Hello James, I find this article exactly what I wanted and the strategy suits
me perfectly. Thank you.

Could you possibly direct me to a recent set up perhaps the USD/CAD ?

so that I can have it framed and put on my desk so the study depicts a
typical trade.

Best

Tom Rushton
Reply

You need to login to your orbex account to be able to comment

LOGIN TO YOUR ORBEX ACCOUNT

Your Email Password

Keep me signed in I can't access my account?

don't have an account?

LOG IN REGISTER FOR FREE

Company Profile Partnership Markets Traders Contact us Accounts Types

MD Message Affiliates Precious Metals Account Types offices Demo Accounts
Company News Introducer Equity Indices ECN Accounts live chat Universal Accounts
License and White Label Program Energies Swap Free Accounts call back request Corporate Accounts
Regulations Asset Managers Soft Commodities Trading Platforms careers ECN Accounts
Institutional Clients FX Futures (OTC) Markets
 Auto Trading
Account Funding
Free VPS
Trading Conditions
Downloads
Risk Warning

Our Partners License & Regulation

License: Orbex LIMITED is a fully licensed and Regulated Cyprus Investment Firm (CIF) governed and supervised by the Cyprus Securities and Exchange Commission (CySEC) (License Number 124/10). Orbex
LIMITED is licensed to provide Investment Services (Reception & Transmission, Execution and Dealing on own account) and Ancillary Services.

Risk Warning: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange, you should carefully consider your investment
objectives, level of experience, and risk appetite. There is a possibility that you may sustain a loss of some or all of your investment and therefore you should not invest money that you cannot afford to lose. You
should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Risk Warning | Disclaimer | Privacy Policy 2017. All rights reserved Developed by wewebit.com