Master the 34 89 EMA strategy combined with price action for effective trading

2026-03-23 04:01:52

Trading based on the EMA 34 and 89 lines is not just about simply following two moving averages. To achieve sustainable profits, you need to combine them with price action—actual market price signals. The guide below will help you understand how to apply this method from theory to practice.

Understanding the Nature of the EMA 34 and EMA 89 Lines

EMA (Exponential Moving Average) is a powerful tool for identifying trends. Unlike SMA (Simple Moving Average), EMA gives more weight to recent price data, helping you react faster to market changes.

Why choose 34 and 89? These numbers are not random. EMA 34 is calculated from the most recent 34 candles, reflecting short-term trends—short-term money flow movements. EMA 89 considers nearly three months of data (on the D1 timeframe), helping you grasp the main long-term market trend.

When these two lines are clearly separated, the market has a strong trend. Conversely, when they are flat or intersect, the market is in a sideways state—avoid trading during these times.

Recognizing Market Trends: When to Enter Orders

The first step in any strategy is understanding which direction the market is moving. With EMA 34 and 89, this identification is straightforward:

Uptrend: When EMA 34 is above EMA 89, the market is bullish. Look for buying (Long) opportunities only. Selling orders are high-risk and not advisable.

Downtrend: When EMA 34 is below EMA 89, the market is bearish. Seek only selling (Short) opportunities.

Sideways: When both lines are flat and close together, the market lacks a clear trend. Wait or consider alternative strategies.

The goal here is to filter out trending markets—where your strategy is most effective.

Price Action Technique: From Theory to Practice

Knowing the trend is good, but precise entry points determine profitability. This is where price action shines. Price action is the art of reading actual price movements, identifying meaningful candlestick patterns that forecast future moves.

When the price retraces near the EMA 34, wait for price action signals:

Pin Bar: A candle with a long wick and a small body, indicating price rejection at a certain level. It shows buyers or sellers attempted to push the price but failed.
Inside Bar: A candle completely within the previous candle’s range, indicating market indecision, often followed by a strong reversal.
Fakey: When price breaks through a support or resistance level but then reverses back. It signals a trap set by professional traders.

These patterns appearing near the EMA 34 are signals to consider entering a trade. You don’t always need a perfect pattern—what matters is seeing price rejection or trend confirmation.

Risk Management with Stop Loss and Take Profit

No risk plan means no plan at all. After identifying your entry point via price action near EMA 34 and 89:

Stop Loss (SL): Place below the lowest point of the signal candle (for buy orders) or above the highest point (for sell orders). If the price breaks this level, your trade logic is invalid—time to exit.

Take Profit (TP): Set based on Risk-Reward ratio. A 1:2 ratio means earning twice the amount risked. A 1:3 ratio is even better but must align with market conditions.

Additionally, consider closing partial profits at key resistance or support levels, or if price action signals a reversal.

Practical Example: Trading EUR/USD with EMA 34 and 89

Imagine analyzing the EUR/USD pair on the H4 timeframe:

Step 1 - Trend Recognition: EMA 34 is above EMA 89. The market is bullish. Prepare to look for buy signals.
Step 2 - Wait for Signal: After a rally, the price retraces near EMA 34. Here, a Pin Bar forms with a long lower wick—indicating buyers are trying to defend the level.
Step 3 - Confirm Trade: When the Pin Bar closes, enter a buy at its closing price.
Step 4 - Manage Risk: Place SL below the Pin Bar’s low. If SL is 50 pips away, set TP at 100-150 pips (risk-reward 1:2 or 1:3).
Step 5 - Monitor: Price moves toward TP, and you close the trade. Or, if price action signals reversal, move SL to break-even to protect profits.

Important Tips and Tricks from Experienced Traders

When using EMA 34 and 89 combined with price action, keep in mind:

Avoid sideways markets: When both EMAs are flat and intersect frequently, it’s a clear sign to stay out. Profits in sideways markets are often not worth the risk.

Prioritize higher timeframes: Trading on H4 or D1 reduces noise compared to M15 or M5. Signals on D1 are more reliable.

Use multiple confirmations: Don’t rely solely on EMA 34 and 89. Check if price action agrees, look for nearby support/resistance, or use other indicators like RSI to confirm buying/selling strength.

Patience is key: Not every moment offers a good trade. Waiting for clear signals increases your win rate.

Combining EMA 34 and 89 with price action is a powerful tool to trade logically and systematically. Success depends not just on tools but on how you use them. Practice on a demo account first, then apply this strategy with small capital. Real-world experience will teach you lessons no book can provide.

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