Ribbons studies have recently gained excellent reputation in
the field of technical analysis due to the efficiency of their signals that
help defining the market directions and the reversals as well.
Drawing Ribbons lines on our charts is simpler than we think, as adding eight moving averages on the same chart instead of one or two will build the cloud.
Actually, most of trend traders are using the values between EMA 10 and EMA 80 to draw their Ribbons lines indicator on the graph as seen on the image below.
Signals from Ribbons lines:
1- Signal for the Exponential Moving Average Ribbons is exactly the same signal as any other moving average crossover and when EMA 10 overlaps other moving averages including EMA 80 positively, it will be considered as a buy signal.
2- Sell signal occurs when we see the bearish crossover.
3- Ribbons assist traders to start watching the market reversal.
The aforementioned signals are explained in the chart below.
Finally, many technical analysts prefer adding 16 different
values of exponential moving averages instead of 8 to get stronger signals.