Introduction

• The strategy we will be implementing today is a 200-day exponential moving average breakout.
• The 200-day exponential moving average appears as a line on the chart and represents the average price over the last 200 days or 40 weeks.
• Exponential moving averages give the trader a sense of whether the trend is going up or down while also identifying potential areas of support or resistance.
• A simple moving average is an average of prices over time, while an exponential moving average (EMA) gives more weight to the most recent data.

 200 Day EMA Positive Crossover

• The 200-day EMA positive crossover is a bullish cross.
• Covering approximately 40 weeks of trading, the 200-day EMA is commonly used in equity trading to determine overall market trends.
• Let’s look at an example in the chart below (Indusind Bank on a daily time frame).

• A stock is generally considered to be in an uptrend if it remains above the 200-day EMA on the daily timeframe. Let’s look at a few opportunities in the live market.

200 Day EMA Negative Crossover

• The 200-day EMA negative crossover is a bearish cross.
• A stock is generally considered to be in a downtrend if it remains below the 200-day EMA on the daily timeframe.
• Let’s look at an example in the chart below (Hindalco daily time frame).

• A stock is generally considered to be in a downtrend if it remains below the 200-day EMA on the daily timeframe. Let’s look at a few opportunities in the live market.

Awesome, but what’s my takeaway?

•  INDUSINDBK, INFY, ICICIBANK, BAJAJ-AUTO &  MARUTI have given a buy call on a daily time frame (Positive crossover)
• HEROMOTOCO, HDFCLIFE, BPCL, SBILIFE & NESTLEIND have given a sell call on a daily time frame (Negative Crossover)