Gold cross and death cross are seen as powerful signals to identify the long-term trend on charts, especially for major stock indices. These signals are mentioned by many professional traders and financial news when analyzing the market.

However, having a signal of a crossover of two EMAs is also very effective that few traders know. It's a 5 and 20 EMA crossover. And we use this signal on D1 chart.

The EMA 5 and 20 EMA crossovers are a short-term signal for a trader to engage in trading and capture fast movements in the price action of the market and then exit when the 2 EMAs have. opposite intersection. It is a signal that allows traders to enter and exit a trade quickly. For asset types with momentum will be even more appropriate.

This is a short-term trading signal that allows traders to capture both the long-term trend and the short-term trend when the market has strong momentum.

This signal works well on stock markets, precious metals, and Bitcoin. This trading signal is done on a large timeframe, so it will have moderate losses, but the profits will be much greater if you know how to grasp the main move of the market trend.

The figure below shows the past backtest performance of $ FAS ETF with a buy signal when the 5 EMA crosses and a close above the 20 EMA and vice versa, sell when the 5 EMA crosses and there is a lower close candlestick. EMA 20.

As you can see the number of profitable orders is much less than the loss, but the profit earned is much greater than the loss per trading strategy. If we can maintain this trading signal properly, long-term principles can help the trader to get solid profits.

Furthermore, this trading signal can create a positive expectation pattern. Exiting orders, traders can also flexibly use other technical indicators signals. For example, a signal of overbought or oversold on the RSI or a strong bearish or strong bullish candle in the opposite direction of the trading strategy, we can also exit at this signal.

Exiting is important as it affects the current trading results as well as the long term of the trader. So we need to have a careful calculation.

The crossover signal of EMA 5 and EMA 20 is often noisy, they are just storms late. So we need to combine it with other indicators or other trading techniques for further confirmation.

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