The Fibonacci Based Moving Averages Indicator offers an ultimate trend-following trading tool for MT4 users. It applies a variety of Exponential Moving Averages and plots crossovers for assessing trend conditions.
This indicator uses 34 EMA – high, low, and close to assess the short-term trends of the price. The 55, 89, and 144 EMA determines the intraday trend. Moreover, it includes 200 EMA that shows the long-term trend conditions of the market.
If you can compare the positions of different period EMAs, you can correctly identify the price trend directions. For instance, if you see the shorter period EMAs moving above, the more extended period EMAs, consider the trend as bullish.
The trade entry levels are determined based on how the price responds to dynamic support/resistance levels. Besides, the 89 EMA shows you ideal levels for placing stop-loss positions.
Buy Signal Generation with Fibonacci Based Moving Averages Indicator
The 34, 55, and 89 EMAs moves above the 144 and 200-period EMAs during a bullish trend condition. Enter long when the price moves above the 34 EMA (high, low, and close) and plots a bullish candle. Place SL below the 89 EMA or 200 EMA, depending on your trading style. Exit long when a bearish candle closes below the 34 EMA support.
Check Out: RoboForex Broker
Sell Signal Generation with Fibonacci Based Moving Averages Indicator
Look for sell opportunities when shorter EMAs dives below more extended period EMAs. Enter short when a bearish candle closes below the 34 EMA resistance with SL above the market high or the 89 EMA.
Hold the sell position until the price candle closes above the 34 EMA. Alternatively, you can always choose to exit an entry after it hits your expected risk to return ratio. In such a case, an ideal R: R will be 1:2.