Supportive EMA Question

[chrundle]

Hello! I'm currently working through lesson 4.4 - EMA Integration. I think I understand when the EMA is supportive, but would like to make sure.
Point 1 shows the EMA acting as support and point 2 confirms it (it does have a bear bar beneath the EMA, but it's not that far below it and instantly goes back above).
So after point 2 the EMA is in hard EMA mode, then at point 3 prices are hugging the EMA and keeping it in hard EMA mode?
Does that sound correct? Thank you!

ema-support.png (596.22 KiB) Viewed 4100 times

[eric-pal]

At point 1 hard ema mode is confirmed. One then simply works through the cycle seeing 1st failures. At point 2 there isn't a decisive break, but we note that prices did move through the ema briefly. However, we see 3 and soon after hard ema being reaffirmed again.

Hopefully helpful and good trades to you!

[chrundle]

Would the 1st blue arrow at point 1 be when hard mode is established? At that point prices had spiked up, pulled back to the ema and rejected with a pretty strong signal bar.

If not, is there an exact formula for when it's hard mode? I think what I said above is correct, but if not I'm confused lol.

"However, we see 3 and soon after hard ema being reaffirmed again." Are you saying point 2 and 3 are no longer hard mode or that it's just a bit more suspect since prices did move through the ema a couple times?

Thank you Eric, I'm slowly getting there haha. I'm trying to solidify things before I start getting too far in the homework so I'm not reinforcing incorrect thoughts on what's going on.

[eric-pal]

Good questions. With the 2nd blue arrow which then "lifts off", note how the ema has been firmly supporting and confirmed. You then use the concept of retracements through the ema to help determine trend strength and dissipation. Preference is for ema to continue to support, but you may find prices move slightly below.

Few things in trading are perfect. You will want to determine whether the ema or channels are primary. When the ema is primary stick with that until prices significantly break. Work through the 2000tick charts specifically observing how the ema is supportive and what happens when it is. Then review those charts for the dissipation of that support. Note when prices continue versus not. You may note some characteristics, and by the time you complete 4.9 a lot of the puzzle will make much more sense.

Hopefully helpful & good trades to you!

[chrundle]

Gotcha, I think I was confusing the rejection a signal bar can show vs rejection like the "liftoff" you mentioned.

It sounds like I was approaching the homework in not the best way. That is very helpful, thank you Eric!