What is a triple EMA crossover setup?
The Triple Exponential Moving Average (EMA) cross appears on a chart when a stock’s very short-term moving average 8 EMA crosses above its moving averages 13 EMA and 21 EMA, giving a bullish breakout. As long-term indicators carry more weight, EMA cross indicates a bull market on the horizon and is reinforced by high trading volumes.
There are mainly three stages to a triple EMA cross. The first stage requires that a downtrend eventually bottoms out as selling is depleted as 8 EMA crosses 13 EMA.
In the second stage, the shorter moving average forms a crossover up through the larger moving average (8 EMA crossing 21 EMA) to trigger a breakout and confirmation of the trend reversal. The last stage is the continuing uptrend for the follow through to higher prices as 13 EMA crosses 21 EMA from below.
An EMA Cross is popular, simple and easy to spot on charts. Moving averages can be powerful when understood correctly, however, they are simple and easiest tool for developing a trading setup. The EMA crossover setup is believed to be one of the most reliable & popular among traders community.
Why to buy Marico?
Triple EMA crossover, a moving average setup, is an integral part of technical analysis but successful traders combine these techniques with momentum indicators and other tools to maximise their odds of success.
Marico has a strong demand zone standing around Rs 400-405, indicating strong support around these levels. At the same time, prices have given a breakout on this stock forming triple EMA Crossover, as its 8 EMA is crossing 13 EMA & 21 EMA from below.
This setup indicates prices are trading with strong positive sentiment and are ready to surge higher until prices close below 21 EMA, which is standing near the 410-mark.
This stock is trading above all three moving averages, which denote that prices are moving with a bullish bias in the short as well as in the mid term. Nevertheless, the price action is in the favour of the bulls and any decisive move above Rs 430 will accelerate the movement. The above rationale suggests one should buy Marico on dip for higher targets of Rs 460.
Buy signal
1. A close above the crucial resistance zone (415-420) indicates that the current up trend is still intact.
2. The short-term moving average 21 EMA is standing at around Rs 415. As prices are trading above it, the short-term trend augurs well with the bulls as prices are sustained and trading above it.
3. Formation of triple EMA crossover suggests buying opportunity.
4. A decent volume participation near the demand zone will also give additional confirmation.
Profit booking
In terms of Triple EMA Crossover Setup, profit needs to trail towards higher side till we see decisive closing below 13 EMA, however, in this stock, we will consider a Fibonacci extension level placed around Rs 460.
Stop Loss
The entire bullish view negates on a decisive closing below 21-EMA or on a bearish crossover of mentioned moving averages. In case of Marico, we will consider Rs 405 as a stop loss level.
Conclusion
We recommend buying Marico around Rs 420, with a stop loss of Rs 405 on a closing basis for a higher target of Rs 460 as indicated in the above chart.
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