There are lots of successful strategies using EMAs and RSI.
I am sharing you a very unique and rare strategy using EMAs and RSI.
Scalping strategy with example using EMA. (Very unique and rare strategy)
Scalping is place very small trades. This strategy is valid for 2-4 candles only and can used on various timeframes. Avoid stocks in news to ensure you win most of the time.
You should know some facts before you start.
Stock price crossing Small EMA has less probability to stay in the same side after it crosses.
So most of the time it will be broken back.
So with this fact, you can do a short term scalp trade if the following conditions are met.
The stock price is initially above small EMA and is well above the larger EMA.
The large EMA has a upward direction.
The stock price dips substantially below small EMA (you can consider it a breakdown of small EMA).
The RSI is below 30. (RSI has the value of EMA as said earlier).
Stock forms a bullish reversal candle (piercing line, bullish engulf, hammer, etc)
If very small value is taken for EMA and RSI like 2 or 3, then point no. 5 above need not be considered.
The stock price will move back towards the small EMA in next 2 to 3 candles. Exit trade in 2-3 candles.
Works best with small EMA and RSI are between 2 to 4. Value of larger EMA is this case can be 50, since the small EMA is too small.
This one works 80% because you keep hearing people cry technical analysis doesn't work.
Yes, breakout of support or smaller moving averages will always fail.
Example from today's breakdown from STAR: (stride shasun)
How many would sell the stock below 530 and how many would buy?
Large EMA (50) is moving upward.
Stock dips substantially from 535 to 521.
RSI 3 is below 30.
Stock forms bullish reversal candle above 526.
EMA (3) is at 531.
Buy stock at 525-527 target 531-532. Time frame 30 mins. SL 522.
Risk is higher than reward. But the probability to hit target is above 90%.
I am adding another example from today’s Trade in Dr Lal Pathlabs:
On one hour chart Dr Lal Pathlabs dips from 1070 to 1040 12 noon to 1pm.
Open price of next candle is 1042.65 and low is 1041.70.
RSI (3) dips below 30.
Position is entered between 1042–1043 with a target of EMA (3) close to 1050 SL at lows of previous candle.
Target hit in 20 mins.
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You can also have a look at my recent short term trading call: Oversold stock. Enter Dmart above 1370. Target 1385 & 1400. SL 1348. | Gale.in, Be Ironic!