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8/21 was a bull trend/channel day on Emini. When the market opened today 8/22 it was above the 5, 15 and 60 min 20 EMA. I saw the first 3 bear bars but waited for a signal because I expected the price to bounce just like yesterday, but it didn't. I could have easily entered in a AIS trade but didn't because of the EMA. How relevant is the EMA when making these decisions. Today was not the first time when the EMA got in my way of making a good trade 🙂 ... I noticed most of Al's videos don't have EMA on them. Is that intentional?
Kiran here is what I thought, hope this helps.
8/22 was a gap up open day. It opened above the close of 8/21, the high of 8/21 and above the 5min 20 bar EMA. So we could either close the gap or not. I thought of the gap as a big bull bar so a breakout. It was coming at the end of a bull trend and was huge so I thought it was very climactic. High above the average price (the ema is the average price), yesterday's high and its close were now all supports but I thought the most important one is the close not the EMA since the gap starts from there.
So I was biased towards always in short.
Bar 3 tested yesterday's high and bounced but we got bar 4 I thought ok this gap is closing and thought it will test the ema and probably the close. Bars 7 to 10 was a wedge bear flag with 3 pushes up so the bear leg 1-7 would have another leg down. Sell below 10 filled 11 got out at the doji bar 80 from yesterday. I thought if it makes a double bottom with yesterday's close it might turn always in long. I picked the doji because it is a micro trading range where price is agreed upon.
Stayed flat through the 15-24 triangle trading range. Skipped the L1 signal 18, skipped L2 signal 24, entered below 27 exited above 34 since now 3 pushes down (1-7, 10-13, 18-33) and 34 looked so perfect any bear would turn bullish.
So the EMA for me is a support/resistance and it is the average price too. It tells me if we are higher/lower than usual in terms of price. The angle or slope, I sometimes use to observe if my channels or trendlines are in confluence. If we are consistently at a distance from it with H/L, I see that as a sign of strength. If we are crisscrossing it every other bar, I see it as the time to take the dog out for a walk. Im not good with breakouts so I stay out. But it is just an anchor amongst many, so I don't focus on more than any other anchor.
Isin, this helps a lot. Following the PA one step at a time continuing to build on the context. As a beginner building that context is a bit difficult. At the end of the day the signals look bright and clear. In the moment they look blurry. More practice will help make the decisions at the right PA. Thanks again.
