To use the Smoothed Heikin Ashi indicator with supports, resistances and moving averages (200, 100, 50, 20) on the hourly frame, you can follow this strategy:
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1. Setting indicators:
Indicators used:
1. Smoothed Heikin Ashi Candles:
It shows a more pronounced trend than the traditional Heikin Ashi because it relies on additional averages.
2. Moving Averages (EMA):
EMA 200 and 100: to determine the long-term trend.
EMA 50 and 20: To identify the short-term trend.
3. Supports and resistances:
Identify key support and resistance levels manually using price action or via analysis tools.
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2. Trading Strategy:
General trend:
Bullish: When the price and candles are above the EMA 200 and 100.
Bearish: When the price and candles are below the EMA 200 and 100.
Entry based on candles:
Buy (LONG):
1. Smoothed HA candles should be green and consecutive.
2. The price is above the moving averages (especially EMA 50 and 20).
3. A breakout of nearby resistance is preferred to confirm momentum.
SHORT:
1. Smoothed HA candles should be red and consecutive.
2. Price is below the moving averages.
3. Make sure a nearby support level is broken to enter.
Additional confirmation:
EMA 20 crossing EMA 50 gives an additional signal.
If it crosses upwards → support buy trade.
If it crosses down → support sell deal.
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3. Deal Management:
Stop Loss:
To buy: Below last support or below EMA 50.
For sale: above last resistance or above EMA 50.
Take Profit:
Identify the next resistance or support as your first target.
Part of the trade can be left open if the trend continues according to the Smoothed HA candles.
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4. Practical application:
Example of a buy (LONG) trade:
1. The price is above the EMA 200 and 100.
2. EMA 20 crosses EMA 50 upwards.
3. Smoothed HA candles are green in sequence.
4. Entry after a resistance breakout, with a stop loss below the last support, and the target is the next resistance.
Example of a short trade:
1. Price is below EMA 200 and 100.
2. EMA 20 crosses EMA 50 to the downside.
3. Smoothed HA candles are red in a row.
4. Entry after breaking support, with stop loss above the last resistance, target is the next support.
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Additional tips:
Use a higher time frame (4 hour or daily) to confirm the overall trend.
Good luck
