Fast EMA above Slow EMA with MACD- Coinrule Strategy of the Week 8
This strategy uses the MACD and EMAs to enter trades. To enter, the strategy looks for the MACD to cross above it's signal line and for EMA8 to be above EMA26. To exit trades, the strategy waits for either a 3% price increase trailing or a 1% price decrease trailing.
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Hi there, and welcome to Coinrules 8th strategy of the week video. This week, our strategy will utilise some more of the new technical indicators we have just integrated, these are the MACD and exponential moving averages (or EMAs). This strategy will make use of one of the predesigned MACD templates on Coinrule. This means that it will be extremely easy to set up and start trading with this strategy on Coinrule. Another important thing to note is that with this template, we also have an associated script on TradingView so you’ll be able to backtest this strategy on any coin and time frame you choose. More on that later.
The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. The result of that calculation is the MACD line. A nine-day EMA of the MACD called the "signal line," is then plotted on top of the MACD line. This can then function as a trigger for buy and sell signals. Traders may buy the coin when the MACD crosses above its signal line and sell—or short—when the MACD crosses below the signal line.
EMAs are a type of moving average (MA) that places a greater weight and significance on the most recent data points. The exponential moving average is also referred to as the exponentially weighted moving average . An exponentially weighted moving average reacts more significantly to recent price changes than a simple moving average simple moving average (SMA), which applies an equal weight to all observations in the period.
To enter trades, this strategy has two entry conditions:
The first is when MACD histogram turns bullish i.e. when the MACD crosses above it’s signal line. If you remember what I mentioned earlier, you’ll note that this is typically a buy signal. The second entry condition relies on the EMA8 being greater than EMA24
The exit conditions utilize trailing take profits and stop losses. Essentially, the take profit and stop loss will adapt to the price trends strength as illustrated in this diagram. The take profit condition is a 3% price increase trailing and the stop loss condition is a 1% price decrease trailing