What it is
A ribbon shows how much agreement there is between short and long term trends. The spacing between the lines shows strength: wide and evenly spaced lines mean a strong trend; lines squeezing together mean the trend is slowing.
The idea is close to Daryl Guppy's multiple moving average, which uses a fast and a slow group. On WickSpeak there are eight slots: six on by default (10, 20, 30, 40, 50 and 60) and two more (100 and 200) you can switch on. You can type any length into each slot, such as 8, 21, 55 or 200.
How it is calculated
Each line is an exponential moving average of the close: start from the previous EMA and move it 2 / (length + 1) of the way towards the new close. The ribbon is bullish when the lines are stacked in order from fastest on top to slowest at the bottom, and bearish when they are stacked the other way. The shading runs between the fastest and slowest lines showing.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| EMA 1 to EMA 6 | 10, 20, 30, 40, 50, 60 | 2 to 1000 each | The lengths of the six lines switched on by default. Spacing them wider shows a broader spread of timescales. |
| EMA 7 and EMA 8 | 100, 200 (off) | 2 to 1000 each | Two extra slow lines you can switch on to add the longer trend. |
How to read it
How to trade it
- 1
On a 15 minute gold chart, wait for the ribbon to be fanned bullish.
- 2
Entry trigger: price pulls back into the ribbon (to the 20 to 40 EMAs) and a candle closes back above the fastest line. Enter on that close.
- 3
Stop below the slowest line or below the pullback low, often 6 to 12 points on gold at 15 minutes.
- 4
Target 2 times the stop. Trail the rest below the slowest line and exit when the ribbon flips.
- 5
On US30, the same plan works on 5 and 15 minute charts.
A close below the slowest line with the ribbon starting to tangle cancels the pullback long; a full flip of the ribbon's order ends the trend view.
On WickSpeak, the EMA ribbon writes a plain-English reading on the live candle: whether the lines are fanned or tangled, how strong the trend is, how to trade it and what would prove it wrong. In Playbook you can test: flips long, flips short, is bullish, or is bearish.
Best markets and timeframes
Trending markets on 5 minute to 4 hour charts: gold, US30, NAS100 and trending forex pairs. Avoid using it alone in ranges.
Common mistakes
- Entering when the ribbon is tangled, hoping it will fan out.
- Waiting for the full ribbon to flip before exiting, which gives back a lot.
- Adding so many lines that the chart becomes unreadable.
Works well with
Questions traders ask
What is an EMA ribbon?
A group of exponential moving averages of different lengths drawn together. Their order and spacing show the trend and how strong it is.
What are the best EMA ribbon settings?
Common choices are 10 to 60 in steps of 10, or lengths such as 8, 13, 21, 34 and 55. WickSpeak defaults to 10 to 60 and lets you add 100 and 200.
What does it mean when the EMA ribbon expands?
The lines are spreading apart, meaning short term averages are pulling away from long term ones: the trend is gaining strength.
Is the EMA ribbon the same as Guppy?
It is similar. Guppy's multiple moving average uses two groups of six EMAs, a fast group and a slow group. A ribbon is any set of averages drawn together.