Moving Averages Ribbon - Steve Burns' MA Ribbon is a tool for analyzing stock market trends by incorporating moving averages.

Steve Burns' MA Ribbon can be used as a trend trading and swing trading tool. They determine the direction and momentum of current price movements on the chart.

Moving averages act as a filter of market sentiment over different timeframes when the price sustains above or below a line for several days. With moving averages, you can see price action momentum and trend by using multiple moving averages on charts. Here are the moving averages that make up the ice sheet that Steve Burns used to use.
  • EMA 5 - Determine the momentum
  • EMA 10 - Identify the short term trend
  • EMA 20 - Reversal signal
  • EMA 30 - Filters for swing trading
  • 50 EMA - pullback in an uptrend
See the picture below:

The price is above the moving average, indicating a bullish market. The more the price is above the stronger the moving averages are.

The EMA crossovers provide a buy signal in a long uptrend. When the short-term moving average crosses and the price closes above the long-term moving average, it is a signal to enter a buy order. Eg:
  • EMA 5 intersects EMA 20
  • EMA 5 intersects EMA 30
  • EMA 10 crosses EMA 30
  • 10 EMA crosses 50 EMA
More of these crossover signals at a time, the stronger the pressure increases.
Profit target can be set near the RSI 70 zone.

To place your stop loss you first need to identify the risk you accept and then you can place your stop loss in the following ways:
  • Stop-loss is a percentage of the price decrease
  • The stop loss is below the short-term moving average in a crossover signal
  • Stop loss if the price falls below both moving averages in a crossover signal.
Or we can move the stop loss for profitable trades:
  • As for the swing traders, the stop loss can be followed by the short-term moving average.
  • For momentum traders, the stop loss can be moved to the previous bottom.
  • As for trend traders, they can hold orders until the short-term moving average crosses back the long-term moving average.
Signals based on moving averages or a moving average strip can do well in many markets. Moving averages do well in a sideways market or during times of high volatility can provide many false signals.
In order to get signals with a higher probability of success, you should backtest and test before using the indicator to trade.

And note that the biggest enemy of the moving average is the high volatility. Moving average crossover signals can help us filter out more noise signals, clearly showing trends and momentum.