RULE 1: Below 5 EMA we are in a bearish Scenario and SL is closing above 5 EMA
RULE 2:Above 5 EMA we are in Bullish scenario in Short term and SL is closing above 5 EMA
As you can see in above Chart Nifty taking support at 5 EMA and bouncing back.So we need to keep 5 EMA as SL for all our Long
As per last week closing 5210 is 5 EMA so we need to keep 5210 on closing basis SL for all our longs.
Now to add more strength to our system I have added 2 more Indicator 5 EMA Low and 5 EMA High which if comined with oscillator can give profitable trades and helps in identifying are 3 types of market ie. Bearish,Bullish and Range-bound.
1. Trading Above 5 EMA High we can except the trend to be up support at 5 EMA high. Close below 5 EMA High we can take short with positions tgt as 5 EMA Low.
2. Trading below 5 EMA Low then price is expected to be trend lower with resistance at 5 EMA Low.
2. Trading in between 5 EMA Low and 5 EMA High trend is expected to be range bound between 5 EMA High and 5 EMA Low with resistance at 5EMA High and support at 5 EMA Low
As you can see in above charts there are many profitable trades that were excecuted, i would like to add that no system is 100% perfect and need to trade with SL for all trades
Trading is a game of Perseverance,Patience and managing Risk.
To get High and Low EMA values you can Take Charts from www.icharts.in