EMA Crossover Signal Indicator
MT4 Momentum TradingFree DownloadThe EMA Crossover Signal Indicator for MT4 was created to let users know about momentum shifts and potential short-term trend reversals. As the name suggests, it’s based on crossovers of exponential moving averages. However these lines are not displayed directly, but it places buy/sell arrows instead when a signal is generated. This form of presentation is favored among many beginners forex traders due to simplicity and clarity. Let’s check if it’s enough to achieve positive outcomes.
This is an example chart:
Intersections of MAs are popular way of objective identification of trend switches. This tool is no different and essentially operates on the very same principle, where a faster line crossing over a slower line signifies a potential reversal.
Depending on the preferences, it may serve for scalping setups when deployed on lower timeframes and for intraday scenarios when working on higher timeframes.
Utilizing these ema crossover signals in trading strategy
Basically the approach applied here is about observing and spotting arrows. Simply speaking, green arrows suggest bullish momentum and similarly, red ones corresponds to bearish momentum.
As you can probably imagine, this is not sufficient for profitable results in most of the cases. Otherwise, there may be too many false signals occuring and there’s need for additional actions.
It’s highly recommended to use it in conjunction of other technical analysis indicators. As there are two main types of setups and here are combinations that work reliably:
- trending – once you are sure there is clear bias, it’s wise to take arrows only in the overall direction (think to introduce moving averages)
- choppy / sideways – in this market when the price is consolidation, it’s smart to onboard some channel like bollinger bands or keltner and take trades after touches of bands and arrows appear (but have rather small take profit targets)
Summary
This is a simple gauge, but it should be rather used with other tools to increase success rate. The provided signals require further confirmations and not all should be taken as they are. What’s more, sensitivity can be customized by changing different periods for EMAs in settings tab.
