April 21, 2018

Trading the One-hour Chart in Oil with EMA Crossovers

Trading the Oil in shorter time frame can be intimidating and requires extreme trade execution skills. The Professional oil traders use the 8-day exponential moving average and 21-day exponential moving average to identify high probability trade in the 1-hour time frame. The blue moving average (8 EMA) is known as the signal line whereas the green line (21 EMA) acts the baseline. When the price is trading below the baseline,we will look for selling opportunity only. Similarly, long trades are opened only if the price is above the base line.

Let’s see how the professional trade the 1-hour time frame in Oil:

Trading the oil with EMA crossover

Figure: Trading the 1-hour time Frame in oil with EMA crossover and price action confirmation.

Trading with EMA crossover is pretty simple and profitable in the 1-hour time frame. After the blue line (signal line) crosses the green line from above, traders look for price action confirmation signal in the baseline. In the above figure, a valid crossover occurred at the “Point A.”

Once the crossover takes place in the chart, traders look for the price action confirmation signal. The bearish pin bar which formed right after the crossover in the baseline triggers the short trade for the traders. Traders put tight stop loss right above the wick of the bearish pin bar and set their take profit level in the nearest support zone. While trading with EMA crossover strategy, proper risk management should always be used.


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