Strategy — EMA10 × EMA30 Crossover

Quick Info

What this signal is
This is a fast momentum crossover: the 10-day Exponential Moving Average (EMA10) moving above or below the 30-day Exponential Moving Average (EMA30).

• EMA10 > EMA30 → Buy bias — short-term momentum overtakes the 1-month trend (early bullish inflection).
• EMA10 < EMA30 → Sell bias — short-term momentum slips under the 1-month trend (early weakness).

Because EMAs react faster than SMAs, this setup can catch early trend changes — but it’s prone to whipsaws in sideways markets. Use confirmations and risk controls.

Extended Guide (Deeper Dive)

1) Signal Definition

• Bullish cross (Buy bias): EMA10 crosses above EMA30 and price closes above the crossover zone.
• Bearish cross (Sell bias): EMA10 crosses below EMA30 and price closes below the zone.
• Faster than SMA20×SMA50 and even a bit quicker than EMA10×SMA50; expect more sensitivity and more noise.

Why EMA vs SMA?
EMA weights recent prices more heavily, improving reaction time at the cost of higher false signals during chop.

2) Entry & Exit Rules (reference template)

Baseline long entry

1. Trigger: EMA10 crosses above EMA30 (today or within last 1–2 sessions).
2. Confirmations (pick 1–3):
   • Close above both EMAs and a nearby swing high.
   • RSI(14) > 50–55 (positive momentum).
   • Volume thrust: day’s volume ≥ 1.5× 20-day average.
   • ADX(14) > 20 (trend present).
   • Trend filter: price above 200-SMA (optional but reduces whipsaws).
3. Risk: Initial stop below the crossover zone or recent swing low (e.g., 1.5–2.5× ATR(14)).
4. Position size: Risk a steady fraction per trade (e.g., 0.5–1.0% of equity).
5. Exits (choose one or combine):
   • Momentum fade: close back below EMA30 or RSI < 45.
   • Trailing: ATR/Chandelier stop or a 10–20% trailing stop.
   • Target-based: scale at +1R and +2R.

Baseline short mirrors the above with inverted conditions.

3) Where It Shines / Struggles

Works best

• Early trend transitions and post-breakout follow-through where speed matters.
• Liquid names with supportive sector breadth.

Struggles

• Sideways ranges where price repeatedly pierces the EMAs.
• Event risk (earnings, guidance, regulatory) that overwhelms technicals.

4) Whipsaw Management

• Trend filter: Only take bullish crosses above 200-SMA (and vice-versa for shorts).
• Persistence rule: Require 2 consecutive closes confirming the cross.
• Retest entry: Prefer the first pullback to the crossover zone after the cross.
• Breadth/volatility guard: Avoid entries during VIX spikes or deteriorating sector breadth.
• Quality score (0–5): +1 each for price > 200-SMA, RSI > 55, ADX > 20, volume ≥ 1.5×, breakout close > recent swing.

5) Timeframe, Sizing & Portfolio Controls

• Timeframe: Daily; swing horizon days–weeks.
• Risk per trade: Keep small (e.g., 0.5–1.0%).
• Open risk cap: Limit aggregate open risk to ≤ 5% of equity.
• Correlation control: Avoid over-weighting one sector/theme.

6) Variations to Test

• EMA10 × EMA20: ultra-fast signals (highest sensitivity, most whipsaws).
• EMA10 × EMA30 + RSI band (55–70): momentum overlay to reduce noise.
• Fresh cross + first pullback: improves entry/stop asymmetry.
• Day-of-week filter: avoid Friday signals to reduce weekend gap risk (optional).

7) Checklists

Bullish crossover checklist

• EMA10 just crossed above EMA30 (≤ 2 sessions ago)
• Close above both EMAs; RSI > 50–55
• Volume ≥ 1.5× 20-day or ADX > 20
• Price above 200-SMA (preferred)
• Stop and position size defined (ATR-based or swing low)

Bearish crossover checklist (inverse)

8) Backtest Notes (how we evaluate)

• Universe: Liquid mid/large caps; ETFs allowed.
• Execution: Next-day open after signal; include realistic slippage.
• Metrics: Win rate, profit factor, max drawdown, CAGR, average hold.
• A/B filters: 200-SMA trend, RSI > 50–55, volume thrust, ADX > 20.
• Exit logic: Close back through EMA30 vs ATR trail — compare robustness.

(Historical performance varies by universe and regime; forward picks are rules-based, not guarantees.)

9) How We Use It at EverHint

• We scan daily for EMA10 × EMA30 crosses and rank by a quality score (trend, momentum, volume, breadth).
• Qualified names appear in Daily Momentum and Crossover posts with fresh vs late tags and a clearly defined risk box.

10) FAQ

Is this a recommendation?
No. It’s a technical signal for research and education. Manage risk independently.

Trade through earnings?
Generally avoid new entries right before earnings unless explicitly labeled as event-risk trades.

Intraday use?
Possible, but noise rises sharply. Our baseline is the daily timeframe.

Crypto/FX/ETFs?
Yes—liquidity and session behavior matter. Test first.

11) Glossary

• EMA: Exponential Moving Average (recent prices weighted more).
• RSI: Relative Strength Index (0–100 momentum oscillator).
• ADX: Average Directional Index (trend strength).
• ATR: Average True Range (volatility/stop sizing).

12) Disclosures

All content is for informational and educational purposes only and not investment advice. Trading involves risk, including loss of principal. Past performance does not guarantee future results. Always use position sizing and stop-loss discipline.

Independent research. No hype, no pumps, no paid promotions — just clean, data-driven signals and concise context.