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How To Use The EMA Ribbon

how to trade ema ribbon

In this article, we will be looking at how to use and build the EMA ribbon indicator on AAX.

If you are unfamiliar with the EMA indicator you can have a read of our previous article explaining the indicator. A crucial part of this EMA ribbon indicator is understanding EMA crossovers.

We recommend that you read through these articles before reading the rest of this post.

The EMA ribbon indicator

The EMA ribbon indicator works through using a variety of EMAs using various amounts of data for each individual indicator in order to create a ribbon effect. Apart from looking pretty, the indicator can provide buy and sell signals as well as provide support and resistance. Below, we can see an example of the EMA ribbon indicator on TradingView.

EMA ribbon BTC/USD

The makeup of the indicator

The indicator consists of two main sections. The first section is the long term EMA. Below we can see the 200 EMA section of the indicator.

BTC/USD 200 EMA

The purpose of the 200 day EMA is firstly to provide support and resistance for the cryptocurrency. In the example below we can see the 200 day EMA provides both support and resistance for BTC as indicated with the white arrows.

BTC/USD 200 EMA support / resistance

The second section of the EMA ribbon indicator is the ribbon itself. The ribbon shows the EMA lines from multiple EMAs on the selected timeframe. When using the ribbon we look for crossovers.

Below we can see an example of bearish and bullish crossovers. The bearish crossover occurs when the longer timeframe EMAs move above the shorter time frame EMAs. We can see this indicated on the timeframe below with the red thumb, with the ribbons turning red. When this occurs it is a bearish signal.

On the contrary, bullish signals occur when the shorter timeframe EMAs cross above the longer time frames EMA. In the example, below this is shown with the green ribbon / green thumb.

EMA ribbon BTC/USD

How to build the EMA ribbon indicator on AAX

To do what is described below, follow these instructions:

  • 1 – Select Moving Average Exponential indicator
  • 2 – Double click on the indicator line
  • 3 – Change the length to the numerical data period provided
  • 4 – Click ok
  • 5 – Repeat steps until all MAEs are displayed

To build the indicator you will require the following EMA settings

IndicatorData periodSupport/resistance provided
Moving Average Exponential15low
Moving Average Exponential20low
Moving Average Exponential25low
Moving Average Exponential30low
Moving Average Exponential35low
Moving Average Exponential40medium
Moving Average Exponential45medium
Moving Average Exponential50medium
Moving Average Exponential100medium
Moving Average Exponential200high
Moving Average Exponential500high
Moving Average Exponential1000high
Moving Average Exponential2500high

Your indicator should now be complete and look something similar to what is shown below.

BTC/USDT indicator example

Indicator conclusion

The EMA ribbon indicator is highly effective at providing buy and sell signals in volatile markets, alongside providing support and resistance. However, during periods of sideways trading the indicator is ineffective and provides inaccurate signals.

On the whole the indicator is easy to follow and can be an effective part of an overall strategy.

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