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Scan the market through the PEMA indicator for spotting great opportunities

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The PEMA (Pivot-based exponential moving average) is exactly like a your traditional moving average, except the key input is the pivot point which as you may recall is the average of the high, low, and close prices: (H+L+C) / 3

While a typical moving average is based on the close price (or in some cases the high, low, or open price), we can build a moving average that is based on the central pivot point, which has much more merit and relevance in our charts.

The PEMA screener scans the market for great opportunities based on specific setups of the PEMA indicator.

It can be used on any timeframe. 

Rules for setting the screener:

1) Define a min and max price for the asset you want to scan for

2) Define a minimum daily trading volume through the VOL variable

3) Define the PEMA fast, PEMA medium and PEMA slow variables. These 3 PEMAs will be used as input for each setup you wish to scan the market for. By default: PEMA Fas: 13, PEMA medium: 34 and PEMA slow: 55 periods as per educational courses.

4) Specify either BUYSIGNAL or SELLSIGNAL to scan for either LONG or SHORT opportunities.

5) Select one of the desired setups to scan the market for. Each setup is explained below in this section:

 

  • PULLBACK: before flagging this option please set the PEMAFAS, PEMAMED and PEMASLO variables under the configuration settings.The long PULLBACK signal in an uptrend is given when:
    • The three PEMAs are stacked and sloped (ideally 45 degrees) aligned in the long direction
    • The second last bar closes below the “PEMA Fast” but still above the “PEMA Medium”
    • The last bar closes back above the “PEMA Fast”
    • The short signal follows the same rules but applied in the opposite way
  • CROSSOVER: before flagging this option please set the PEMAFAS, PEMAMED and PEMASLO  variables under the configuration settings.The long CROSSOVER signal in an uptrend is given when:
    • The “PEMA Fast” crosses over the “PEMA Slow”
    • The short signal follows the same rules but applied in the opposite way: “PEMA fast” crosses under the “PEMA Slow”
  • DEMACROSSOVER: before flagging this option please set the PEMAFAS, PEMAMED and PEMASLO variables under the configuration settings.
    The DEMACROSSOVER uses the double exponential moving averages of the “PEMA Fast” (DEMA Fast) and “PEMA Slow” (DEMA Slow) defined for ensuring more reactive signals on the chart.The long DEMACROSSOVER signal in an uptrend is given when:

    • The “DEMA Fast” crosses over the “DEMA Slow”
    • The short signal follows the same rules but applied in the opposite way: “DEMA fast” crosses under the “DEMA Slow”
  • MODCROSSOVER: this signal takes always the PEMA1, PEMA3 and PEMA21 as input parameters.The long MODCROSSOVER signal in an uptrend is given when:
    • The last close is above the PEMA21, which is used as the trend confirmation variable (bullish trend)
    • The PEMA1 crosses over the PEMA3
    • The short signal follows the same rules but applied in the opposite way: PEMA1 crosses under the PEMA3 when the prices are closing beneath the PEMA21 (bearish trend)
  • BREAKOUT: before flagging this option please set the PEMA Fast / PEMA Medium and PEMA slow variables under the configuration settings.
    Beware to use these signal during trading range markets to spot price patterns breakout in either long or short direction. Ideal price patterns can be triangles, rectangles, pennants or consolidation ranges. PEMAs should be flat and horizontal with no clear direction.The long BREAKOUT signal is given when:

    • The open and high of the last bar are above the three PEMAs
    • The close of the last bar is beneath the three PEMAs
    • The short signal follows the same rules but applied in the opposite way

The PEMA method concepts have been taken from the educational courses by Frank Ochoa and made available on PRT through proprietary coding.

Please feel free to get in contact with me to deepen the trading methods behind its usage.

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