Using the 34 EMA as part of a breakout trading strategy can point you in the direction of the trend of the market. Combined with trend lines, it can also allow you to enter trades counter trend for quick scalping opportunities.
Any time you a trading counter to the 34 EMA, you are going against the longer term trend direction so you want to make sure you tightly manage your trade so you don’t get caught in the wrong direction.
- 34 Period EMA – exponential moving average
Technical Analysis Tool
- Ability to draw trend lines consistently
You can use 34 EMA scalping strategy as a swing trading strategy as well but for this article, we are going scalp which generally means a smaller time frame. You can scalp larger time frames of course because scalping simply means taking quick profits as they are made available.
Time Frames To Use For Scalping
- One minute
- Five minute
- Fifteen minute
Currency Pairs For Scalping
We want to make sure we are scalping Forex pairs that have robust moves to them. Slower moving currency pairs will work as they also get momentum moves, we will stick with the higher traded pairs
Of course you can try other pairs but make sure that whatever pair you use does have a decent ATR – average true range, during your trading session.
Buy Scalping Setup Rules
- Market is in an down trend as shown by the 34 EMA
- Price breaks above a downwards trend line
- Price breaks above the 34 EMA
- Look for a very bullish candlestick or chart pattern such as horizontal channel
Let’s go through this chart to see how it plays out
- 34 EMA is showing that we are in a down trend on this five minute chart
- The trend line (inner trend line) contains price until…..
- Price breaks above trend line, breaks slightly above 34 EMA and then breaks upwards
Profit Targets and Stop Loss
You can use the 34 EMA breakout candlesticks low for a stop loss and use risk multiples for a profit target. You can also target previous pivot highs for a take profit target.
Whatever you choose to do, ensure you are consistent in your approach and use a rule based trading plan so your efforts are repeatable on every single trade.
Sell Setup Scalping Rules
- Look for the 34 EMA to show we are in an uptrend
- Price breaks below an upwards sloping trend line
- Price breaks below 34 EMA
- Look for a bearish candlestick or a chart pattern such as horizontal channel
I wanted to show a less than perfect scalping setup and in this example, price pulls back across the 34 EMA shortly after breaking down.
- 34 EMA slope shows that we are in an uptrend
- Inner trend line (demand line) are usually much better than extreme pivots
- Price has broken the EMA first and after a brief consolidation period (often a good entry location) price pushes below trend line
- Great example of targeting prior swings for price targets
I also want to point out the blue box on the left.
Inner trend lines can often give potential backside reversals and in this case you can use a simple trend line trading strategy to take this trade
Simple and Repeatable Scalping Strategy Using 34 EMA and Trend Lines
The key to any trading strategy is consistency. Make sure you set your trading rules down on paper and draw your trend lines in a consistent manner.
As well, here are several other vital variables to your scalping strategy (or any trading strategy)
- Where are you going to exit your trade either in profit or at a loss?
- What candlestick or candlestick pattern will you use to enter your trade?
- How much will you risk per trade so you can withstand the draw down from losing trades?
Please like/share this trading article and check out my free weekly Forex setups!