Moving Average channel Template is pullback trading system based on Moving Average, channels and Stochastic Histogram .This trading System gives signal when there is a pullback in strong up trend or strong down trend. Further candlestick Based trend identification tool is used for taking entry and exit from the trades.
Moving Averages are simple trend identification tool which removes the noise from the price action and give clear indication of the trend in current time frame. Which short term moving average is below the long term moving average then it is considered as bear trend and traders should look for short trades in this condition. When short term moving average is above the long term moving average then it is considered as uptrend and traders should look for long trades in this type of market conditions.
Further slope of moving averages are useful in trend determination. In this trading system, 233 simple moving average along is used as long term moving average with 56 Exponential moving averages as short term trend deification tool.
Stochastic Histogram is another important part of this trading system which gives confirmation of trend. If Price is in uptrend then Stochastic will form green histogram above the zero level. In case of downtrend stochastic will plot red histogram below the zero level.
Further candlestick Based trend identification tool is also used with this trading system to take long and short trades. Traders should take long trade only when candles are green and short trades only when candles are red. Traders should avoid trading if Candles are yellow as it is sign of range bound market.
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Ma-Channel-Template : Buy conditions
- Short term moving average is above the long term moving average.
- Slope of the Moving average is rising.
- Stochastic histogram is above the zero level.
- Candles formation in green color.
Ma-Channel-Template : Sell conditions
- Short term moving average is below the long term moving average.
- Slope of the Moving average is falling.
- Stochastic histogram is below the zero level.
- Candles formation in red color.