Starting from Scratch

In this next post I will strip the charts bare and begin to rebuild them for you so you can see how each of the components are entirely separated from each other, yet used together at a later date.

Let's begin with moving averages.

Moving averages are a great way to keep things really simple and have stood the test of time.
Moving averages were first used over 100 years ago. long before computers were used for charting. Technical Analysts used to calculate these things and plot them onto rolls of graph paper.

I have been a big fan of the 20 exponential for a number of years. It's widely used around the globe today by institutions, banks, retailers and armchair investors which is why it works.

Yes it's a lagging indicator so it tells the past opposed to the future but it does work.

Lets look at the 20 moving average for immediate and short term first. In the case of the 15m chart, the immediate term is the green 7 ema and the short term is the red 20.

One of the best ways to understand these is by looking for crossovers. When the immediate (green) is above the short term (red) then the trend should be up and when the immediate is below the short term then the trend is down.

A lot of traders will trade against the trend but in my opinion it's less risky to trade with the trend.

I am using a 15 minute chart for this picture. However, I suggest you go back over charts of all timeframes to see how history repeats itself with emas. If you look at the daily chart for reference it will show that the immediate ema has been below the short term ema with the Yen since November and this saw a drop of over 800 ticks.
Since earlier this week the immediate ema has crossed above the short term ema indicating that the Yen is potentially gaining strength.

On the 15 minute chart it's the same story. Here..

I must point out at this point, and should have earlier, that the Yen futures chart is opposite to that of USDJPY, so what you are looking at with these charts is actually JPYUSD  

You can check any chart on any timeframe on any market. The 20 moving average works.....
Not all of the time, no, but quite a lot of the time and therefore, that's our basis. Now let's add some more components to help strengthen the strategy.