In this system, we use 3 indicators:
1. 5-period Exponential Moving Average (EMA 5) applied to the Close.
2. 12-period Exponential Moving Average (EMA 12) applied to the Close.
3. 21-period RSI (RSI 21)
Entry Rules for Long Trades:
It’s simple. We enter a long trade when EMA 5 crosses EMA 12 to the
upside… AND our RSI 21 > 50.
Entry Rules for Short Trades:
Enter short when EMA 5 crosses EMA 12 to the downside.
AND RSI 21 < 50.
Stop loss = 20 – 30 pips… depending on the volatility of the currency
pair. For more volatile pair, like GBP/USD, stop loss = 30 . For less
volatile pair, like EUR/USD, use stop loss of 20 pips.
Exit Rules for Long Trades:
Exit the trade when EMA 5 crosses back below EMA 12
Or when RSI 21 < 50. Or when price stalls at major resistance, trendline, pivot points, Fibonacci projection target. Or when bearish engulfing patterns or inverted hammer patterns form. Exit Rules for Short Trades: Exit our short trade when EMA 5 crosses above EMA 12 OR RSI 21 > 50