EMA 34 and EMA 89 combined with Price Action: Effective trend trading strategy

Why choose EMA 34 and EMA 89?

When starting with moving averages, many traders make the mistake of using too many indicators. However, EMA 34 and EMA 89 are the optimal choices because they operate on simple yet effective principles:

EMA 34 reflects the short-term trend, being “sensitive” to recent price fluctuations. EMA 89 acts as a “guide” for the long-term direction. This combination creates a very clear trend identification system.

Basic principle: Reading signals from the position of two EMAs

Uptrend: EMA 34 is above EMA 89 – At this point, look for buy (Long) opportunities.

Downtrend: EMA 34 is below EMA 89 – Wait for a sell (Short) signal.

Sideways market: The two lines run horizontally or cross frequently – best to skip this phase.

The advantage of this method is that you always know which direction you are trading in, minimizing the risk of trading against the main trend.

Finding the perfect entry point with Price Action

Once the trend is identified using EMA 34 and EMA 89, the next step is to find the “key entry” – the precise entry point. This is where Price Action comes into play.

Important candlestick patterns to watch for:

• Pin Bar: A candle with a small body and a long “tail” on one side. It indicates significant buying/selling volume has previously rejected price levels, signaling a reversal.

• Inside Bar: The current candle is completely within the range of the previous candle. It signals the market is “holding back,” and a breakout may be imminent.

• Fakey: When the price breaks through support/resistance levels but quickly reverses back, it’s a false signal – a good technical selling opportunity.

Application scenario: In an uptrend, when the price retraces near EMA 34 and forms a bullish Pin Bar (tail pointing down), it’s time to enter a buy. The price “tried” to go down but was “rejected,” creating a good buying opportunity.

Managing orders: Entry – Stop Loss – Take Profit

Entry point: Enter when the candle pattern (Pin Bar, Inside Bar) closes and confirms the signal. Don’t enter immediately upon seeing the shape; wait for the candle to complete.

Stop Loss (Stop Loss):

• For buy trades: Place SL below the low of the signal candle
• For sell trades: Place SL above the high of the signal candle

This protects you if the market moves against your expectation.

Take Profit (Take Profit): Use a Risk/Reward ratio (R:R):

• Minimum 1:2 (risk 1 to earn 2)
• Preferably 1:3 or higher

Or close the position when the price hits the next significant support/resistance level.

Practical example: EUR/USD

Suppose you are monitoring the EUR/USD pair on the D1 (Daily) timeframe:

1. EMA 34 is above EMA 89 → The uptrend is confirmed
2. Price retraces near EMA 34, forming a clear bullish Pin Bar (tail pointing down, small body above)
3. The Pin Bar closes → Enter a buy order
4. Place Stop Loss below the low of the Pin Bar (about 50-100 pips depending on volatility)
5. Set Take Profit at the next resistance or according to a 1:3 R:R ratio

If the market moves immediately after entry, the SL will protect you. If the price continues upward, profits will accumulate gradually.

Important notes when applying EMA 34, EMA 89, and Price Action

Avoid trading in sideways markets: When EMA 34 and EMA 89 run horizontally or cross too frequently, signals become very “noisy” (nhiễu). Only trade when the two EMAs are clearly separated.

Prioritize higher timeframes: Trading on H4 (4 hours) or D1 (1 day) provides less noisy signals compared to smaller timeframes like M15 or M5. Larger timeframes = stronger trend = lower risk.

Price Action must be combined with EMA: Don’t rely solely on candlestick patterns; check the position of EMA 34 and EMA 89. Combining both indicators yields more reliable signals.

Patience is key: Not every retracement will produce a good Price Action pattern. Wait for truly clear signals; don’t rush.

Conclusion

Combining EMA 34, EMA 89 with Price Action is a relatively simple yet effective trading method. It provides tools to:

• Clearly identify the main trend
• Find safe entry points
• Manage risk properly with Stop Loss and Take Profit

The key to success is practicing pattern recognition, understanding each step of the logic, and most importantly, being patient for the right signals. It’s not necessary to trade frequently; focus on trading correctly.