EMA - 7

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This is the same panel as the earlier number 1 with the Bressert Double Stoc and the mechanical buy/sell signals plotted on the chart. A rise above the sell line (the upper horizontal line in the oscillator) followed by a downturn paints the price bar purple to indicate a possible sell setup, and an entry signal is generated when the low of the purple setup bar is taken out. Sell signals are not taken when the red EMA is rising and the difference between the red and blue is expanding.

At "A" a buy setup bar is generated following a drop below the lower horizontal buy line and an upturn in the oscillator. A rise above the setup bar generates a buy signal, which occurred at the top of the cycle. This is not a buy signal that would be taken. The red EMA continues down as the trading cycle bottoms are indicated by the blue setup entry bars; however, buy signals are not taken against a declining, red EMA unless the longer-term trend is clearly up, which is not the case here.

Just before "B", a sell signal is generated following the trading cycle top that was followed by a decline into a trading cycle bottom. The blue setup bar and entry signal would have been used to take profits, but not to go long as the trend was clearly down.

The buy signal at "C" might have been taken depending upon the longer-term cycle, timing bands and other technical analysis. The purple sell signal at the trading cycle top before "D" could have been taken as the price level stopped at resistance. Also, the red EMA did not continue expanding above the blue, and instead formed a fingertip as prices continued sharply lower as the red EMA continued to decline faster than the blue.

The two blue setup bars before "F" indicate a potential bottom, but would not be tradeable buy signals because the market is in a clear downtrend. The sell signals following "F" could have been taken; however, the sell signal is not as dynamic as the sell signal at "E" in which prices rose above the expanding red line to be followed by a sharp decline. At "F" the expansion stops, and the distance between the two EMAs narrows. But this does set the stage for a buy out of the cycle bottom near "G", which is a retest of the low.

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