Registered User
Joined: 4/28/2009
Posts: 8
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My Theory:
If the stock's previous bar's close crosses the 3-period EMA, it usually signals that a change in direction is soon forthcoming.
Desired Setup in StockFinder:
When a stock closes below its 3-day EMA after at least three consecutive higher highs and higher lows, and the current candle's price drops below the previous candle's low and crossed the 3-day EMA, then the system would generate a sell signal, using a 10- or 20- day moving average line (whichever is closer) as the profit/support target area to close the position.
Note: The closest moving average from the entry signal may only be 25 cents, which may not make the trade worth while, 2-5 points (dollars) away would be a favorable risk/reward so rules should require a 2 point minimum.
Conversely, you would enter a long position when the price closes above the 3-period EMA, and where at least the previous three bars have made lower highs and lower lows. The trade can be entered when the price crosses above the previous candle's high which completed the pattern, looking for the 10- or 20-day moving average line to serve as the first resistance/target profit area where the system would send a sell signal.
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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You should be able to Open the attached Chart directly into a running copy of StockFinder. It contains Rules for going Short and Long as well as Rules to Cover and Sell when the Target is met. The Rules are based on the Closing Price crossing the Moving Average on both the Entry and Exit. Attachments:
acamb626-39681.sfChart - 72 KB, downloaded 611 time(s).
-Bruce
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