I just want to point out that the angle of the 50SMA is not a matter of calculating
it. It is a matter of a visual aspect. As long as it is not flattish. Again what is flattish. That
is why I used 20 degrees or greater just to emphasize that if it is to flat it gives false signals.
Let me explain it this way. See the three different moving averages as three lanes
on a highway. A slow lane, a medium fast lane and a fast lane. The 50SMA represents the
slow lane, the 21EMA represents the medium fast lane and the 10EMA represents the fast lane.
Circle No 1,2 and 3 as you can see comes back to the 50SMA and the speed or
momentum can then be described as slow(in the slow lane).
The purple No4 as another move up and the movement is above the 10EMA(fast
lane). No5 confirm the momentum as in the fast lane. No 6 and 7 would have been perfect entries.
However with experience I already saw that at No4 there is no interference with
the MA’s therefore I would have entered on No5 and then No6 and my two deals for the
day was done.
Between 6 and 7 you could see the speed changing as the 10EMA slightly change
speed.(Angle becomes flatter) this is a sign that the speed might be changing. At No8 the
speed changed to slow again. Wait for the speed to change to fast.
As you can see that although the 50SMA was upwards at point 1,2 and 3 the angle
or speed was not enough. The retracement(pullback) is normally back to the lane that
represents the speed. This is a very important point. If the speed is slow( 50SMA) the
pullback will be to the 50SMA. Therefore it is important to wait for the speed to be in the
medium to fast lane because the pullback will be into that zone.
The speed of point 5,6 and 7 was better than 1,2 and 3.
I hope this explained the setup better.
In The Zip File , You should see the software files:
5min intraday method.tpl
5Min Intraday Strategy v1.pdf