Online Trading Concepts


Moving Average Exponential Ribbon

The Moving Average Exponential Ribbon technical indicator is simply numerous exponential moving averages of increasing time period plotted on the same graph.

The number of exponential moving averages (EMA) to plot varies immensely among users of this indicator; also, some users plot the simple moving average instead of the EMA. Likewise, the lengths of the moving averages varies wildly as well. One must factor the time horizon and investing objectives when selecting the lengths for the moving averages.

In the chart below of the E-mini S&P 500 Futures contract, eight EMA's were selected, starting with the 10-day EMA and ending with the 80-day EMA:

moving average exponential ribbon buy and sell signals

Moving Average Exponential Ribbon Potential Buy Signal

A trader may interpret a buy signal as he/she would with other moving average crossover, the faster moving average crossing over the slower moving average; however, the difference is that there are numerous crossovers. Decisions must be made as to how many crossovers must occur before a buy signal is officially triggered.

A close-up of the potential buy signal crossovers is presented below:

closeup of moving average exponential ribbon

Moving Average Exponential Ribbon Potential Sell Signal

Similarly, a possible sell signal is given for the Exponential Moving Average Ribbons when the moving averages begin to crossover; however, determining how many crossovers must occur before a sell signal is officially triggered is up to the stock, futures, or currency pair trader.

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