The 50 and 200 period moving averages are important indicators used by professional traders in their strategies. On large time frames MA 50 and MA 200 act as support resistance. At the same time, the intersection of these 2 lines also shows the change of trend.

And the strategy for you will be based mainly on 2 main principles which are also based on these 2 moving averages. However, we need to add the Stochastic indicator to get more confirmation for the entry point.

Our strategy will be a long-term strategy so the main timeframe we trade will be the weekly one. Note that with long-term trades, very few signals will be generated and the hold time will be very long.

Note when using the strategy

  • Time Frame: W1
  • Currency Pair: Any
  • Technical Indicators: MA 50, MA 200, and Stochastic

In which MA 50 and MA 200 are mainly used to ensure traders trade with the main trend and have Stochastic filter out good quality trading opportunities.

You see the example below


Trading principles

For buy setup
  • Wait for MA 50 to cross above MA 200 or MA 50 to be above MA 200 then traders can look to make a buy trade. However, it is necessary to attach 2 more conditions to the Stochastic indicator.
  • Price needs to pull back (price falls in an uptrend) and Stochastic falls into the oversold zone.
  • Open a long position when a bullish candlestick pattern appears and at the same time Stochastic crosses upwards.
  • Take a stop below the bullish candlestick pattern or below the nearest support.
  • Keep the trade following the 50 or 200 MA. As long as the price is above the 2 moving averages, we still hold the position. Or exit the order when a sell signal appears.
Below is the chart for the buy signal


For sell setup
  • Wait for MA 50 to cut below MA 200 or MA 50 to fall below MA 200, then traders can look to enter a sell trade. However, it is necessary to attach 2 more conditions to the Stochastic indicator.
  • Price needs to pull back (price rises in a downtrend) and Stochastic falls into the overbought zone.
  • Open a short position when a bearish candlestick pattern appears and at the same time Stochastic crosses downwards.
  • Take a step above the bearish candlestick pattern or above the nearest resistance level.
  • Keep the trade on the 50 or 200 MA. As long as the price is below the 2 moving averages, we still hold the sell position. Or exit the order when a buy signal appears.
Below is the chart for the sell signal

Note, it is recommended to use frame D1 or higher for this signal. This is a trend trading strategy on a large timeframe. So the time to hold the order will be long, remember to check the overnight fee before placing the order.