We wanted to go a bit further into how we trade futures and use the EMA. A couple of points:
- The reason we watch 3 min, 5 min, 15 min, and 60 min simultaneously is because we always want to know which time-frame the market is keying off. Our golden standard for 10AM to 1PM is usually the 5 min chart with 9/20EMA. But we also often have an eye on the 15 min chart.
- Most times the market responds to the EMAs/ pivot points on the $SPY, but not always. Lately we’ve found the $ES_F has been leading. Note that Pivot points on SPY/ES_F do not correspond with each other.
- We’ve also often found that the ES trades better when we have no daily spots (stock alerts), which of course works well as a complement. Volatility in stocks makes things very messy, but often gives excellent ES opportunities.
- We try to only trade futures when the EMA is smooth ascending/descending. For our way of trading if we only trade the ES_F when the EMA is non-wavy our consistency rate is excellent, and the exact inverse is true when it’s wavy/flat.
We were keying off the 15 min on the ES_F today — note the perfect Indy set-up. We run up fast to 1150 zone, base until 9 EMA catches up, and then rip up. Excellent long risk/reward trade.
SPY 5 min was also decent pattern, but not as clear. Note how SPY constantly hammered on the EMA refusing to close under it, finding support on R1 — very bullish sign.
Second clear trade came at shorting R2 with a very tight stop on the ES_F for a decent scalp. The only way though to take a short like this is when stock rips up from base extended from base, and into resistance. If EMA had caught up we would never go short this pattern.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.