Step 2

Use the 23- to 30-day EMA band to determine the major trend of the market

The program rules are as follows:

  • To generate a buy signal:

    On the daily chart, the market must first close above the band. (That's both the 23 and 30 moving averages.) This day forms what is called the set-up bar.
    The market subsequently must exceed the high price of the set-up bar. When both steps are met, a new buy signal is generated, indicating that the market is now in a confirmed up-trend.
  • To generate a sell signal:

    On the daily chart, the market must close below the band (both the 23 and 30 moving averages). This is the set-up bar for a potential sell signal.
    If the market then exceeds the low price of the set-up bar, a new sell signal is generated, ...

Get Trading Commodities and Financial Futures: A Step-by-Step Guide to Mastering the Markets, Third Edition now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.