Balanced Gold Trading Systems: EMA Crossovers and Oscillators
Many professional traders often combine a number of different trading strategies to develop a unique and balance profitable gold trading strategy.RSI and the Stochastic oscillator is considered to be one of the best leading indicators since both of them exhibit extreme accuracy in the signal.
In this balanced trading system, we will use 5 and 10-day exponential moving average in order to generate extremely profitable signals in the gold chart. This system tends to generate more than 80% success rate when traded in the shorter time frame. However, the most professional trader only uses the 15-minute time frame to trade the gold with this system.
Let’s see the chart setup of this balanced trading system:
Figure: Trading the 15 minute Gold chart
In the above figure, the green line is 10-day exponential moving average while the red line is the 5-day moving average. Professional short term traders use this moving average crossover as the prime indicator for their trade execution. Stochastic and the RSI indicators help to filter the false signals generated in the market.
When the 5EMA crosses below the 10 EMA traders looks for the confirmation from RSI and stochastic indicator for the sell signal. If the value of RSI is less than 50 with a downward moving stochastic line, traders start their short gold trading activity. On the contrary for buy entry traders look for a bullish EMA cross over.
EMA Crossover Activity
When the 5 days EMA crosses above the 10day EMA, traders look for confirmation in the oscillators. If the value of RSI is greater than 50 with a stochastic line heading north, traders take their buy trade. Some traders might be wondering why we are buying the Gold when the stochastic line is heading towards the overbought region.
The answer is pretty simple. Since we are trading in shorter time frame, price tends to show the most extended upward moves before becoming fully overbought.