Market Rhythm

Market Rhythm 4 Hour Strategy I.1 Beginning of the UP Trend (EMA  E!"onentia# SMA  Sim"#e Mo$ing A$erage% A$erage% When the price goes through the 89SMA it tends to pullback to the 21EMA, if the 21EMA is above the 89SMA. f not it tends to pullback to the 89SMA or to the 8EMA. f there is an! MA either the 8 or 21EMA that are above the 89SMA, the price "ill tr! to get back to the# before #oving a"a!. f the price goes again belo" the 89SMA it #eans that the rh!th# "ill start over again so the price "ill pullback to 21EMA if it is above the 89SMA. f not it tends to pull back to the 89SMA or the 8EMA. f the price in a trend co#es onl! to the 8EMA, it #eans that the trend is ver! fast and price #a! bounce off the 8EMA continuing "ith the trend "ithout going to the 21EMA. f !ou "ant to enter a trend !ou do it "hen price co#es to the 21EMA and #oves a"a!. Entr! fro# the 21EMA in the trend is a high probabilit! trade, but should be confir#ed b! MA$% and #arket e#otion &#orning star, bullish engulfing etc' and the risk re"ard ratio should be good. When price is in a strong up trend the 89SMA is above the 2((SMA. I.& Beginning of the ')* Trend When the price goes through the 89SMA it tends to pullback to the 21EMA, if the 21EMA is belo" the 89SMA. f not it tends to pullback to the 89SMA or to the 8EMA. So if there is an! MA &8 or 21EMA' that are belo" the 89SMA, the price "ill tr! to get back to the# before #oving a"a!. f the price goes again above the 89SMA it #eans that the rh!th# "ill start over again so the price "ill pullback to the 21 EMA if it is belo" the 89SMA. f not it tends to pullback to the 89SMA or the 8EMA. f the price in a trend co#es onl! to the 8EMA, it #eans that the trend is ver! fast and price #a! bounce off the 8EMA continuing "ith the trend "ithout going to the 21EMA. f !ou "ant to enter a trend !ou do it "hen price co#es to the 21EMA and #oves a"a!. Entr! fro# the 21EMA in the trend is a high probabilit! trade, but should be confir#ed b! MA$% and #arket e#otion &evening star, bearish engulfing etc' and the risk re"ard ratio should be good. When price is in a strong do"n trend the 89SMA is belo" the 2((SMA. II.1 End of the UP Trend When a trend is changed the price nor#all! crosses the 21EMA and then tests it again before #oving do"n to the ne)t MA. f in an uptrend the price co#es belo" the 21EMA it tends to pullback to it and then #oves do"n to the 89SMA. So#eti#es the price after closing belo" the 21EMA "on*t go back to it, but "ill go straight to the 89SMA. f in an uptrend the price co#es belo" the 21EMA it pulls back to it closing above the 21EMA, and again it co#es and closes belo" the 21EMA then it #a! #ove do"n to the 89SMA. When an up trend co#es to an end the price is #aking lo"er highs and lo"er lo"s and the MA$% so#eti#es sho"s divergence &#eaning the price goes up "hile the MA$% goes do"n'. +he price #a! bounce off the 89SMA and go to the 21 EMA and the trend #a! continue. r the price #a! go though or bounce off the 89SMA then go back to 21EMA and again back to the 89SMA. +his can be start of consolidation or range period. Entr! on a trade should be #ade "hen the price is #aking a lo"er high after reaching a lo"er lo", but the trade should be confir#ed b! MA$% and #arket e#otion &evening star, bearish engulfing etc' and the risk re"ard ratio should be good. II.1 End of the ')* Trend When a trend is changed the price nor#all! crosses the 21EMA and then tests it again before #oving do"n to the ne)t MA. f in a do"ntrend the price co#es above the 21EMA it tends to pullback to it and then #ove up to the 89SMA. So#eti#es the price after closing above the 21EMA "on*t go back to it, but "ill go straight to the 89SMA. f in a do"ntrend the price co#es above the 21EMA it pulls back to it closing belo" the 21EMA, 21EMA, and again it co#es and closes above the 21EMA then it #a! #ove up to the 89SMA. When a do"n trend co#es to an end the price is #aking higher highs and higher lo"s and the MA$% so#eti#es sho"s divergence &#eaning the price goes do"n "hile the MA$% goes up'. +he price #a! bounce off the 89SMA and go to the 21 EMA and the trend #a! continue.

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r the price #a! go though or bounce off the 89SMA then go back to 21EMA and again back to the 89SMA. +his can be start of consolidation or range period. Entr! on a trade should be #ade "hen the price is #aking a higher lo" after reaching a higher high, but the trade should be confir#ed b! MA$% and #arket e#otion &#orning star, bullish engulfing etc' and the risk re"ard ratio should be good. III. +ounter Trend When the price is trending it tends to pull back to the 21EMA before continuing the trend. So#eti#es it co#es onl! to the 8EMA before continuing the trend. -ou should onl! take counter trades "hen the price is a"a! fro# the 8EMA in order to have space to take first profit at the 8EMA and the second one at the 21EMA. -ou should take into consideration counter trades "hen there is i#portant resistance or support &such as trend lines together "ith price level, ibs etc', but the trade should be confir#ed b! MA$% and #arket e#otion &#orning star, evening star, engulfing etc'. -ou onl! take the trade if the risk re"ard ratio is higher than 1. f !ou do trades against the trend the! are risk! ones and the gains so#eti#es are not too big. I,. Range n range period price oscillates bet"een MA &89SMA and 21EMA or 89SMA and 2((SMA'. f the price goes though the 89SMA it tends to pullback to the 21EMA and then #oves a"a!. /ut if the price instead of #oving a"a! fro# the 89SMA goes back to it, then goes to the 21EMA then back to the 89 SMA and so on. t is the start of a range period. t is ver! i#portant to establish a channel for the price #ove#ent bet"een resistance and support levels. f !ou trade in this period !ou have to do it fro# the edges &fro# support to resistance level or fro# resistance to support level', but the trade should be confir#ed b! MA$% and #arket e#otion &#orning star, evening star, engulfing etc' and the risk re"ard ratio should be good. n range period !ou should al"a!s be a"are of the breakout, because it "ill co#e sooner or later and !ou don*t "ant to be on the "rong side. ,. Breakout When the price is s0uashed bet"een trend lines, support and resistance or it is in a consolidation or range period, it nor#all! breaks out. -ou can enter a trade before the breakout or after the breakout. f !ou can anticipate the direction of the breakout and !ou have #ade previous pips during that period &range, consolidation period etc', !ou can position !ourself for the breakout before it actuall! occurs. f not !ou should "ait for the pullback to the breakout level and "hen it #oves a"a! !ou can enter. +he pullback #a! occur on the  hour or on the 1 hour ti#e fra#e. So#eti#es the pullback #ight be in onl! one  hour candle and the MA$% "on*t give a signal. f the pullback is in 2  hour candles the MA$% #ight sho" a +$. t is ver! i#portant to re#e#ber that the breakout of a support, resistance or trend line is not a confir#ation, but the pullback is so !ou should look at the price action for it. So#eti#es the breakout #a! be false and the price "ill retrace and close belo" the breakout level.

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