It doesn’t matter if you are day trading or swing trading — the 21 EMA can serve as an invaluable tool to you as a trader.
Look, there’s lots of fancy indicators out there. It’s just about every week that something new comes along for you to spend a few grand on.
But trading doesn’t have to be a sales pitch. It can just be about the technicals.
I’ve done day and swing trading throughout my entire career and with that said, the 21 EMA served quick different purposes respectfully.
Day trading, price action continuing to respect the 21 EMA in the favor of the overall trend is a great sign for continuation.
However, once price action has begun to close beyond the 21 EMA, the fast moving average, short-term momentum has broken.
Now it doesn’t mean that it can’t regain its footing and resume, but for the moment it’s certainly taking a breather.
I typically employ the 13 EMA and 8 EMA with my 21EMA when day trading on my fastest time frame. This is the timeframe I’m making critical management choices on.
That timeframe is typically on a 3 minute chart. On a 15 minute chart I will employ the 21 & 8 EMA’s to help define the overall trend direction.
When swing trading, either looking at a daily or weekly chart, the 21 EMA is typically the fastest MA whereas it was the slowest when day trading.
The 21 EMA swing chart is going to be used as the earliest sign of the trend beginning to break. This will be followed by typically a 50 EMA & 200 EMA defining the overall move.
Listen, we’d all like to just have one tool and employ it to earn a fortune. But that’s not how the market operates. If it was, everyone would be doing it.
But it is our job as traders to find tools that serve meaningful purposes and put them to work. Regardless if you are day trading or swing trading, I think the 21 EMA can help!
If you’d like to learn more about specific techniques employed, please click here.