As recommended, by you in the BB thread, I am now trying to wrap my head around the use of EMA bands.....I hope I understood it correctly
The EMA 2H and EMA 2L are plotted in a pink/purple color. I hope its visible in the image. Its the EOD data for Adani Enterprise, 16th July 2013....
1) After a gap down start and some red candles below the bottom BB bar, finally a green bar with the EMA band cutting the lower BB line. Entry point for a long position..
2) As per our discussion in the BB thread, the center line is to be treated as a resistance / support line. The first green candle cutting the center SMA 20 line is an exit point. Wait for the next candle to form, after setting a trailing stop loss. If there is no new high in the next candle, square off and exit long position.
3) The EMA 2L line goes below the bottom BB line and returns above the bottom BB line with the formation of the green candle. Another buy signal for a long position...
4) Ready to exit long position, but since a new high is formed in next candle, hold position with trailing stop loss...
5) Top BB line is cut by green candle, square off long position...
With the formation of
a) the red candle immediately after the green candle
b) the EMA band going back into the BB zone
Entry point for short position....
6) Cuts center SMA 20 line, ready to exit short position, wait for new lows in subsequent candles. Exit short a few candles after that
Note: The ideal exit for the short would have been the needlike red candle before 13:00 which nearly touched the SMA 20 line.....
7) Another opportunity for long position, but it is after 15:00, not a good time I would assume....
Did I get it right...or have I made some blunders along the way ??