Forex Family EMA Chronicles: The Almighty 200 EMA!

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The purpose of this document is to further advance your knowledge on EMA’s (Exponential Moving Averages) – If you didn’t know the definition of this. You are not ready for this. This time in the series. We will go over the almighty 200 EMA! WOW! Now this one is slightly lengthy if you haven’t already noticed the page count. Just a quick brief overview of what will be covered is demonstrated below.


What is the 200 EMA?
It’s the same as the 14, 50 EMA just this time it’s 200 lol Just kidding. The 200 EMA is a stronger EMA because it’s calculating the price over 200 periods from the current price. So it has a broader range of prices in consideration. As we say higher time frame holds more relevance. The same can be related to the 200 EMA. Especially on the higher timeframe it is very effective which I will demonstrate later in this guide.

What is the significance of the 200 EMA?
Well the significance is that it follows a premium price zone and also shows you the trend bias.
Premium Price Zone? – An area of price where banks and institutions love driving price to get the best price to buy/sell. So as a rule of thumb
  • If the 14/50 is above the 200 EMA – Bullish trend so look for buys
  • If the 14/50 is below the 200 EMA – Bearish trend so look for sells.

Superior Support/Resistance
  • As the legendary Wicks Don’t Lie says
  • 1hr and 4hr support and resistance are key reversal areas
  • Why? Pretty simple answer because the higher timeframe prevails.
  • 4hr/Daily only really gets broken when there is strong momentum to break it or news acts as a catalyst to break into new price zones.
  • Hence these areas are strong price zone areas for reversal or retest.
  • Back to the point
  • These can often be demonstrated by the 200 EMA
  • How much I can trust the 200 EMA and how do I know this area will prove insightful?
  • Well just look left where the 200 EMA is and you’ll notice it’s in a price action zone and it lines up real
  • nice.
  • How do I know it will hold?
  • Wait for confirmations and candle closes
  • What about on the lower timeframe?
  • You can use it in the same way and if you look left you will still it line up with zones, however remember lower timeframes are subject to more fake outs and EMA breaks. So again be patient, watch for candle confirms and take your time to figure out what’s going on.
  • Regardless of lower timeframe to higher timeframe the 200 EMA provides the same function in terms of s/r just bare in mind the higher the timeframe the stronger the confluence. Lower timeframe is more susceptible to fake out and breaks of the 200 EMA however is good when price is in very strong momentum.
  • You can see in the above example after we get the 14/50 cross it follows with a 14/200 cross.
  • But look how price comes back to the retest the 200 EMA and acts as dynamic resistance and continues with trend.

  • Now look at this example on the daily
  • Look left see how the 200 EMA outlies a zone?
  • The look at what happens on the first tap of the 200 EMA. It acts as support and retraces all the way back to the 14 EMA.
  • Remember the higher the timeframe the stronger the 200 EMA is
  • The lower the timeframe the weaker it is
  • Generally rule of thumb 15m above is relatively strong.
  • 5m is good also as long as the zones/momentum lines up with it
  • 1M is susceptible to all sorts of fuckery!
Premium Price Zone
  • What do I mean by premium price zone?
  • These are price areas of interest for the banks and institutions.
  • So UJ has been a in nice heavy downtrend so lets say everyone is now in sells. So what happens is
  • we see a sharp move towards the EMA as we can see above. This is a liquidity grab.
  • Take out the sellers by hitting stop losses and margin calls. Most likely they will have grabbed buyers
  • too foolishly thinking the trend has changed and they will then let the trend resume.
  • So cashing in by taking both seller/buyer equity.
  • Here is a great example for when buyers got taken out when in price was in an uptrend.
  • Another liquidity grab.....
  • So what happens if it breaks the 200 EMA and doesn’t bounce off?
  • This is when you would see a trend reversal. Which is commonly seen as the 14/200 cross.
  • You see this happen more commonly on higher timeframes 1hr plus is better. This is just some general knowledge for you however of how markets move.
Fakeout Cross Filter
  • Trend and counter trend visualization
  • Now this area needs to be taken with some care. It’s something I’ve noticed but not back tested enough but I still think this it’s worth talking about.
  • Works better on higher timeframe such as 15m+
  • So what I’ve noticed with my time watching charts.
  • If the 200 is pointing in a direction such as pointing up or down and price is far away.
  • Then even if you see a cross forming down it will most likely reverse and carry on with the direction that the 200 EMA is showing. Unless it’s a strong candle.
  • You will see this mostly when the 200 EMA is a fair distance away from price.
  • When price is closer to the 200 EMA then it can act as a TP area.
  • Remember even if its far away as I mentioned above for the cross to be valid it needs to form and
  • retest then you may be able to use the 200 EMA as TP area.
  • Let me visually describe what I’m trying to say because this is slightly confusing I know!

See how you could assume a cross was going to happen but the 200 EMA is acting as a support and therefore the cross didn’t happen. It’s just a confluence however. If price is heavily in momentum it could break right through but it gives you a nice idea of what to expect and where to take extra care and get more confirms before taking a trade foolishly!

14/200 Cross
  • This is another EMA cross that follows after the 14/50 cross
  • What does it mean?
  • It just reinforces the trend that originated from the 14/50 cross. In effect when the 200 EMA is close in
  • proximity you could use this to enter a trade AFTER the 14/50 crosses first (see chart below)
  • Entry criteria?
  • Entry criteria stays the same.
  • Let it cross. Look left is it in a zone. Wait for retest and grab the continuation.
  • Let’s see a visual since that’s what everybody understands better.

  • So you see 14/50 cross forms out. The candle then engulfs and goes through the 200 EMA
  • This is a good indication of a 14/200 cross forming as long the candle stays under the 20 EMA. Now you just wait for a retest a zone and follow the trend.
  • Remember EMAs still need to spread before entering even though 200 EMA provides strong confluence always let EMA’s form out to confirm direction.
  • Always wait for candle closes. It doesn’t matter if it throws a 10-20 pip candle through the EMAs. Its more crucial how and where the candle closes.
  • Remember to look left – retest always align with zones and are the best areas to enter the trade.
  • You still wait for a retest for entry just as you would for the original 14/50 cross.
  • Nothing changes just you are now dealing with a more powerful cross
  • Remember also crosses in line with trending momentum are the best ones.
Visual Reference









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