Four-EMA Breakout Strategy with Swing Support and Resistance
Summary
This rule-based strategy seeks long breakouts when the close is above the 20, 50, 100, and 200 EMAs and exceeds the previous bar’s high. Shorts require the close below all four averages and below the previous bar’s low. The description recommends daily or weekly charts and stocks, indices, or ETFs, while emphasizing instruments with sustained trends. Dynamic support and resistance are plotted from pivot highs and lows, but those levels do not appear in the stated entry conditions.
The initial stop is placed at the previous bar’s opposite extreme, and a configurable risk-to-reward multiple sets the target. An optional trailing stop can activate after a specified profit threshold; exits may also tighten the stop when price crosses the faster averages. The script limits trades by direction per day by default and prevents simultaneous long and short positions. The document provides rules and implementation settings, but no performance statistics or validation. Pivot levels require subsequent bars for confirmation, and results may vary by market, timeframe, costs, and execution assumptions.
Key ideas
- Long entries require a close above four EMAs and the previous bar’s high.
- Short entries require a close below four EMAs and the previous bar’s low.
- Initial stops use the previous bar’s low for longs and high for shorts.
- A configurable risk-to-reward multiple sets the target, with an optional trailing stop.
- Pivot highs and lows are plotted as dynamic resistance and support, but are not specified as entry filters.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.