Trend following 3 EMA & Bullish Engulfing indicator for Forex

The Trend following 3 EMA & Bullish Engulfing indicator for Forex tool identifies high-probability momentum entries by combining triple Exponential Moving Average trend filtering with specific engulfing candlestick patterns and higher timeframe confirmation.

Usage

This indicator is designed for trend-following strategies, primarily in the Forex markets. It looks for a specific confluence of factors before signaling an entry:

• Trend Filter: The tool uses three EMAs (8, 13, and 21). A bullish signal requires the 8 EMA to be above the 21 EMA, while a bearish signal requires the 8 EMA to be below the 21 EMA.
• Momentum Entry: Once the trend is established, the script looks for Bullish or Bearish Engulfing candles that represent a pullback and subsequent resumption of momentum.
• Multi-Timeframe Confirmation: To increase accuracy, signals are filtered by a higher timeframe (HTF) trend check, ensuring that the local momentum aligns with the broader market direction.
• Trade Execution: Users typically look to enter on the open of the next candle following a signal. Stop losses can be placed at the high/low of the engulfing candle, with potential take-profit targets set based on a multiple of the candle's size.

Details

The script utilizes a triple EMA structure (8, 13, 21) to define the short-to-medium term trend. The engulfing logic is parameterized to allow users to define the minimum height and "wrap-around" requirements of the engulfing candle in pips, making it adaptable to different currency pairs and volatility regimes. The inclusion of the request.security function allows the script to pull data from a secondary timeframe to act as a global trend filter.

Settings

Timeframe & Security

• HigherTimeframe: Sets the timeframe used for the secondary trend confirmation (e.g., 240 for 4-hour, D for Daily).
• Security Length: Determines the bar offset/length used for calculating the higher timeframe EMAs.
• Show Security-EMA8 / EMA21: Toggles the visibility of the higher timeframe moving averages on the current chart.

Engulfing Patterns

• BullEn/BearEn Height (Pips): The minimum required height of the engulfing candle body in pips.
• BullEn/BearEn Above/Below (Pips): The required distance the engulfing candle must exceed the previous candle's range to be considered valid.

FAQ

How do I use the higher timeframe filter effectively?

It is recommended to set the HigherTimeframe input to at least one step above your current chart (e.g., if trading on the 1-hour chart, set the HTF to 4-hour or Daily) to ensure you are not trading against the dominant trend.

What do the triangles on the chart represent?

A green "Eng" triangle indicates a Bullish Engulfing pattern that aligns with both the local EMA trend and the higher timeframe trend. A red triangle indicates a Bearish Engulfing pattern meeting the same trend criteria.

How can I access Trend following 3 EMA & Bullish Engulfing indicator for Forex?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.