EMA Strategy

Complexity

Low

Indicators

EMA Strategy

📘 Summary

Indicators	EMA (9) EMA (26) RSI (14)
Suggested Chart Timeframes	1H, 1D
Long Entry	- EMA9 is above EMA26 - RSI falls below 30
Short Entry	- EMA9 is below EMA26 - RSI rises above 70
Suggested Exit Signal	- Fixed Stop-Loss/Take-Profit levels (e.g., 1% and 3%). Or - EMA(9) crosses EMA(26)

📚 Details

The core idea of the strategy is to combine short term and longer term trend indicators (EMA 9 +26) with a momentum indicator (RSI).

While we want to spot the right trend using the EMA, we identify the perfect entry using the RSI..

Required Indicators

To use this strategy, you will need two key indicators (well, actually three — however, we use the Exponential Moving Average in twi different ways):

Exponential Moving Average 9 (moving average of the last 9 data points. For example, if you are on the daily chart, the average of the last 9 days).
Exponential Moving Average 26 (moving average of the last 26 data points)
Relative Strength Index (RSI 14): A crucial momentum indicator representing oversold markets (RSI < 30) and overbought markets (RSI > 70).

Chart Timeframes

This strategy is versatile across several chart timeframes. However, backtest results show considerable better results on higher timeframes, including 1H, 4H, and daily charts.

Entry Signals

Let’s have a look at the entry signals. The strategy provides a clearly defined entry signal for both long and short trades. However, it is important to make sure that all criteria are met before opening a trade!

Long Entry Signal

Ensure the EMA9 is above EMA26 to indicate an uptrend.

Confirm that the RSI fell below 30.

💡

Here’s what has happened: The asset is in an short-term uptrend but experienced a small sell-off (RSI below 30). Based on the trend, we expect a reversal, the price to rise and accordingly the RSI to return to neutral territories. This is when we enter!

📎

Alternative: Instead of entering a trade when the RSI drops below 30, you can also wait until the RSI rises above 30 again. This approach can be considered as more safe but slightly limited in its potential.

Short Entry Signal

Obviously, the short entry is the opposite in terms of indicators.

Ensure the EMA9 is below EMA26 to indicate an downtrend.

Confirm that the RSI rose above 70.

💡

Here’s what has happened: The asset is in an short-term downtrend but experienced a small run (RSI above 70). Based on the trend, we expect a reversal and downtrend continuation, the price to fall and accordingly the RSI to return to neutral territories. This is when we enter!

📎

Alternative: Instead of entering a trade when the RSI rises above 70, you can also wait until the RSI falls below 70 again. This approach can be considered as more safe but slightly limited in its potential.

Exit Signal

When it comes to the exit signals, you can have more flexible approaches. However, make sure to define your exit strategy before you enter the trade.

Here are two options:

Set fixed Stop-Loss/Take-Profit levels (e.g., 1% and 3%). You can backtest the best levels before executing your trade (Crypto OS offers a straightforward feature to backtest your strategies).
You can also use the EMA-Crossover as exit signal. Accordingly, you close your trade when the EMA9 crosses the EMA26 again.

Backtest Results

Depending on market conditions and chosen tokens, success rates of 58% - 68% have been observed. However, as already mentioned, the strategy shows better results on higher timeframes, such as the 4H or daily chart.

How To Apply The Strategy?

All indicators required for this strategy are available on TradingView, making it accessible for traders at all levels.

For those looking for a more direct approach, Crypto OS offers this strategy as a pre-defined signal for more than 200 crypto tokens, simplifying the process even further.

↗️

Check out Crypto OS The most powerful crypto platform: Automated trading signals, AI forecasts, backtesting, trading bots, and much more. → Elevate your trading now!

Table of Contents

EMA Strategy
📘 Summary
📚 Details
Required Indicators
Chart Timeframes
Entry Signals
Exit Signal
Backtest Results
How To Apply The Strategy?

Sub Pages