Friday, February 17, 2006
lesson III
1. Moving averages are a lagging indicator as we all know but they can keep you on the right side of the market. Use relatively fast EMA.. 8/21 or 13/20. Use these to simply stay on the right side of the market. If the fast EMA is above the slow EMA then start looking for longs. The actual EMA's you use are all your personal preference. I have also used the 9/34. 8, 21, 89 period EMA's are all divisors of the Fib ratio
2. Look at these on all time frames to stay on the path of least resistance. Start with the longer time frames Montly, Weekly, Daily, 60min etc... the longer charts carry more weight or significance than the shorter time periods. If the weekly, daily and 60 min are all in the up direction for example, you should ignore the sell signals because they are low probablity at this point and the strongest moves will be to the upside. If they are mixed then that may be a time that you can play both sides.
3. The moving Averages usually act as a filter, not a signal to buy or sell.
Swing trades.
4. Can use EMA's and RSI as divergence indicators. When there is RSI divergence look for the MA's to roll over and cross for longer term swing trades.
5. Use daily & 60 min charts with 8/21 EMA's for setups, 7 period RSI for setups. Use Fib ratios for retrace (50%) usually. These can take weeks or months but can result in powerful moves.
2. Look at these on all time frames to stay on the path of least resistance. Start with the longer time frames Montly, Weekly, Daily, 60min etc... the longer charts carry more weight or significance than the shorter time periods. If the weekly, daily and 60 min are all in the up direction for example, you should ignore the sell signals because they are low probablity at this point and the strongest moves will be to the upside. If they are mixed then that may be a time that you can play both sides.
3. The moving Averages usually act as a filter, not a signal to buy or sell.
Swing trades.
4. Can use EMA's and RSI as divergence indicators. When there is RSI divergence look for the MA's to roll over and cross for longer term swing trades.
5. Use daily & 60 min charts with 8/21 EMA's for setups, 7 period RSI for setups. Use Fib ratios for retrace (50%) usually. These can take weeks or months but can result in powerful moves.
