Forex Trading Strategy – Combining Exponential Moving Averages and Parabolic SAR

Written by Miroslav Marinov

Miroslav Marinov

Miroslav Marinov, a financial news editor at TradingPedia, is engaged with observing and reporting on the tendencies in the Foreign Exchange Market, as currently his focus is set on the major currencies of eight developed nations worldwide.

, | Updated: October 30, 2024

For this strategy we will be examining the 1-hour chart of EUR/AUD. The indicators we will be using are: a 14-period Exponential Moving Average (EMA) set to high (blue on the chart below), a 14-period EMA set to low (also blue in color), the Parabolic SAR with default settings (0.02; 0.2) and the Slow Stochastic Oscillator with settings 5,3,3.

As soon as a candle closes above the 14-period EMA (high), the Parabolic SAR positions under the candle and the Slow Stochastic is not overbought, this is a setup to go long. A trader may set a trailing stop at the 14-period EMA (low). Once the Parabolic SAR changes its position, the trader needs to exit.

As soon as a candle closes below the 14-period EMA (low), the Parabolic SAR positions above the candle and the Slow Stochastic is not oversold, this is a setup to go short. A trader may set a trailing stop at the 14-period EMA (high). Once the Parabolic SAR changes its position, the trader needs to exit.

Below we visualize one long and one short trade, based on this approach.