Using Vwap Indicator with EMA20 and EMA50
The VWAP (Volume Weighted Average Price) indicator is a technical analysis tool that helps traders understand the average price of an asset based on both price and volume over a given period of time. Using it alongside the EMA 20 and EMA 50 is a popular strategy among traders for price analysis.
How to use VWAP with EMA20 and EMA50:
1. VWAP:
It represents the volume weighted average price and is mainly used to determine the market trend. When the price is above the VWAP line, it indicates an uptrend, and when the price is below it, it indicates a downtrend.
2. Exponential Moving Average 20 (EMA20):
It is a 20-period moving average. It is a faster indicator for identifying short-term trends.
3. Exponential Moving Average 50 (EMA50):
It is a 50-period moving average, used to identify medium-term trends.
Trading Strategy:
Compatibility between VWAP and EMA:
If the price is above the VWAP, EMA20 and EMA50 lines, it indicates that the market is in a strong uptrend, and can be a signal to enter a buy trade.
If the price is below VWAP, EMA20 and EMA50, it indicates a downtrend and could be an opportunity to enter a sell trade.
Intersections:
If the EMA20 crosses the EMA50 upwards, this could indicate the beginning of an uptrend.
If the EMA20 crosses the EMA50 to the downside, this may indicate the beginning of a downtrend.
Size check:
Since VWAP is volume-based, traders often use this strategy to ensure that price action is supported by sufficient volume.
Conclusion:
Using VWAP with EMA20 and EMA50 provides a comprehensive view of short- and medium-term price trends, as well as confirmation of the trend based on trading volume. (Fast Trades) Fast Scalping
You must connect the small and large frames to determine the general trend and prevent the price from rebounding on you.
Practical application of the strategy:
1- Purchase deals:
If the price is above the VWAP indicator, we enter buy trades only and do not enter sell trades.
We wait for the two averages to cross, with 20 above 50 and both above VWAP. We enter the buy and exit with a candle closing and not a tail below the 20 average.
2- Sell deals:
If the price is below VWAP, we enter sell trades only, we do not enter buy trades.
We wait for the intersection of the 20 averages below 50 and the two below VWAP. We enter a sell and exit with the closing of a candle and not the tail of the highest 20 average. Good luck.
