How to Setup Forex Trading Pattern
Please setup chart at candlestics, with period of 5 minutes
Please go to indicators list and choice MACD indicator
Please set default settings:
fast period: 12
slow period: 26
signal period 9
Please back to indicators list and select Moving Avarage indicator
Moving Avarage Indicator
After select moving Avarage please select type – SMA
Period of 200
middle thicknes and blue colour
Please open forex asset which you would like to trade
MACD + SMA 200 Trend Forex Indicator, Trading Pattern
There are hundreds of indicators used for forex trading; the need to have a confirmation for an identified sign or pattern makes common to used them in combination or simultaneously. The MACD + EMA200 Indicators combination is widely used for forex trading. MACD + EMA200 Indicators combination is intended to increase sensibility and specificity for forex market trend trading.
What is MACD?
The Moving Average Convergence Divergence or MACD is a trend following momentum indicator, which is obtained by combining two moving average. To get the MACD, most traders used the EMA 12 or exponential moving average for a 12 period minus EMA 26 or the exponential moving average for a 26 period. Moreover, the Moving average for a 9 period included in the 12 and 26 periods is obtained, and it uses as a call to action line, this call to action line gives clear indication to forex trader about when to buy or sell forex or a particular currency pair to maximize their profits. Please visit our article about MACD
What is EMA 200?
The exponential moving average 200 (EMA 200) is similar to a simple moving average 200, which is obtained by adding the asset’s closing price for a given period and then divided into the specified period. The difference is that for EMA more weight or importance is given to the latest exchange rate closing prices allowing it a faster reaction to recently price changes. Notice that the number after the EMA indicates the number or periods used, in EMA 200, 200 terms are used. EMA 200 used the latest 200 exchange rates for forex market
What are MACD + EMA 200 Indicator
The Moving Average Convergence Divergence or MACD + The exponential moving average 200 (EMA 200) is the simultaneous use of two indicators to corroborate a forex price trend or any reversal of a current currency pair exchange rate price trend or forex price trend. The combination of both of them had been proven useful for any asset trading, and its accuracy makes it widely used by forex traders.
How to use MACD + EMA200 Indicators
How to use MACD + EMA200 Indicators
1. Create a price charr for the considered exchange rates or currency pair.
2. Get the MACD; the indicator is included in most trading platform and trending software; you only need to select the color or how it will be displayed on the screen on your forex trading platform.
3. Get the EMA 200; some brokers recommend that the EMA 200 should be obtained for 3 different terms each of them of 200 periods showing the latest 200 exchange rate for each of them to maximize profits from earliest price trend identification. It is particularly useful for forex trade with shorter than 5 minutes expiration time.
4. Mark the signal line base on MACD 9. The signal line will be placed at the MACD 9 value, and the EMA 200 will be used as confirmatory tool for the MACD
5. Price above EMA 200 when the exchange rate is above the EMA 200. There is an uptrend. Therefore the exchange rate price will increase, and the forex market indicates that the trader must buy the currency.
6. Price below EMA 200 when the exchange rate is below the EMA 200. There is a downtrend. Therefore the asset’s price will decrease, and the forex market indicates that the trader must sell the currency.
7. Call to action, when the MACD and the EMA 200 agree and show the same signals, you will immediately act accordingly.
a) Buying the asset or buying the currency: the signal line will be used as a call to action trigger. Each time the MACD shows a convergence above the signal line or a crossover above the signal line and the EMA 200 confirms it, you will buy the currency to your maximum amount based on your strategy. The currency price will increase. An upward exchange rate price trend is in place.
b) Selling the asset or selling the currency: the signal line will be used as a call to action trigger. Each time the MACD shows a convergence below the signal line or a crossover below the signal line and the EMA 200 confirms it; you will sell the currency to your maximum amount based on your strategy. The exchange rate price will decrease. A downward exchange rate price trend is in place.
c) If there is a price trend and the MACD and EMA 200 indicates a trend in a different direction. It is a clear reversal sign which means the price direction is changing, and you must act accordingly.
8. When the MACD and EMA 200 are contradictory, you need to wait until both indicators agree and both of them show the same price moving direction to do your forex trading.
When SMA 200 Indicator show UP TREND and MACD blue line are crossing orange line from bottom, than you should open BUY possition.
When SMA 200 Indicator show DOWN TREND and MACD blue line are crossing orange line from top, than you should open SELL possition.
See Examples of SELL trades:
Benefits of using MACD + EMA200 Indicators
·By using both indicators over the same exchange rate price chart and with the same currency pair, you increase your response speed after identifying a signal or call to action point maximizing your profits.
·By using both indicators, you increase your win ratio. Both indicators increase its prediction value almost exponentially.
·Both indicators are included in the most forex trading software and forex trading platforms free of charge. Therefore, you only need to look for it and choose the displaying setting.
·Don’t need another confirmatory instrument, they both are confirming each other when they show the same information, and when they show opposite one, they are canceling each other.
·Great certitude for anticipating forex price or exchange rate moving direction, both indicators when are used correctly predict exchange rate price moving direction.
·Clear signals and call to action instructions
·They filtered the market noise and let you get a clear picture of the current forex situation.
·Using both of them over a candlestick exchange rate price chart increases to almost 99% of time trend trending identification, each time the three instrument show the same information. Additionally, a reversal or just the next price moving direction could also be identified accurately for forex market.
·It is one the best combination of trend trading.
In a nutshell: MACD + EMA200 Indicators are used to identify a forex trend trading condition, a market reversal or anticipate the next exchange rate price moving direction. The indicators pairs confirm each other, and the call to action suggestions are exact and easy to follow by any forex trader. The forex price moving direction is anticipated with great certitude when both indicators agree in the signals. The MACD + EMA200 do not foresee the forex market future. They used mathematical models to identify a previously considered exchange rate pattern, which outcome is well-known and they offer signals to establish where in the cycle the exchange rate price is at the evaluated time. If one indicator shows a contradictory information with the other indicator, or when they are not perfectly matched at their exchange rate price moving direction anticipation that is a clear sign to wait until the indicators agree.
Enjoy Trading 🙂