3 EMA with RSI Forex Trend Following Strategy
Forex indicators:
- 13 EMA (exponential moving average);
- 21 EMA (exponential moving average);
- 55 EMA (exponential moving average).
- MACD indicator (8, 21, 8,)
- RSI indicator ( 21 period).
Rules for Long Entry:
- A new candle opens ABOVE all three MAs AND
- MACD make second bar ABOVE the zero line AND
- The value line of RSI moves ABOVE the RSI Trend Line. When RSi is above 50, it is most reliable but not necessary to be above 50.
Rules for Short Entry:
- A new candle opens BELOW all three MAs AND
- MACD make second bar BELOW the zero line AND
- The value line of RSI moves BELOW the RSI Trend Line. Below 50 RSI is reliable but not necessary.
To draw a trend line, just simply connect at least two turn points of RSI value line by a straight line which connects the last two value line tops. The last value line top is the one that is formed closest to your current signal than the others and match closest to correction on the price chart. The next line top is normally lower than the first top in a Short trade and higher than the first top in a Long trade.
Exit position
You can use a fixed target profit set to be the same as your stop loss (100 pips) or use this exact exit rules: For Long Trade: EXIT when the value line of RSI crosses the trend line (which is determined at the entry setup) downward. For Short Trade: EXIT when the value line of RSI crosses the trend line (which is determined at the entry setup) upward.
Profit Target Predetermined or Profit Target ratio 1.5 Stop Loss.
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