A simple cross is a useful indication of a change in direction of a trend and is a very popular tool in trading. It can also be useful to judge price action momentum or severity by looking at the angle of the 2 EMAs, or the distance between them.
There are 2 Exponential Moving Averages, one fast and one slow. When the fast crosses above the slow , this can be considered and may signal an upside move. Conversely, a cross to the downside of the fast under the slow can be considered .
This strategy uses the same principle but uses different sources for the 2 EMAs; instead of using close values, we use ohlc4 values for the fast and hlc3 values for the slow .
The idea is that a trader might enter a long position upon a cross up and reverse position and go short upon the next cross down.
We use a simple 6% stop loss for both long and short positions.
This strategy is tuned to a 6hr chart for Bitcoin USD pairs.
- Go Long when the background is green
- Go short when the background is red
- White background means sideways market: a no trade zone