What is an EMA Crossover Strategy?

With an EMA crossover strategy we are using multiple exponential moving averages.

The reason we use multiple moving averages is to gain a better insight compared to what we do when only using one moving average.

One moving average can smooth out the overall price action and give us a good indication of the overall trend. However, when using multiple moving averages we can start to gauge a trends strength and also find trading opportunities.

In the example below, we are using the 8 and 21 period EMA’s. When the faster moving 8 period EMA moves above the slower moving 21 period EMA we know that price is looking to trend higher. When we see the EMA’s start to widen away from each other we can then start to see this trend and new move higher is gaining momentum.