How can I use Exponential Moving Averages (EMA) to trade Pullbacks? Trading pullbacks with EMA can be done profitably as long as we use a long-term exponential moving average. And, without a doubt, the 200-day EMA is probably the most powerful moving average that a trader can use.
For a valid EMA pullback setup we need two things to happen:
First, a break of the EMA. Second, the price needs to move further away from the EMA, creating an empty space. Once these two variables align together we have a powerful EMA trading setup.
Here is a stock chart highlighting this EMA stock trading strategy: