55 EMA - Why you should know it.
What is the 55EMA and why is it important? The 55EMA is a key moving average in the market that not many people tend to focus on. Why the number 55? It is a fibonacci level similar to all the other EMAs I use on my charts (8, 21, 34, 55, 89, 144, and 233) Does the 55EMA actually mean anything? Lets take a look at this 2021-2022 daily $SPY chart and you can decide for yourself.
Notice how price reacts at and around the 55EMA. It tends to be a key point to determine intermediate trend direction.
How can you play the 55EMA? First, it is important to understand a chart's history to determine if the 55EMA is something that acts as a key level or inflection point. If so, here are a couple key rules to keep you in a bull market and keep you safe during a bear market. 55EMA slope is rising -> Buy the pullback or buy the break back through to the upside
55EMA slope is falling -> Sell the rip, short the pullback, or short the break through to the downside.
Though this concept is the most basic understanding of learning to play a trend, sometimes in the market - the more simple the better. Though this analysis on it's own may work in some cases, it is important to measure all other variables and just use it as another tool in your trading toolbox.