SHEL EMA Crossover Strategy

EMA crossover occurs when a fast EMA (like 9-period) crosses a slow EMA (like 21-period). Golden cross (fast crosses above slow) = buy signal. Death cross (fast crosses below) = sell signal. It captures momentum shifts.

9/21 is a proven combination balancing responsiveness and noise filtering. 9-period captures ~2 weeks of price action, 21-period ~1 month. This suits Shell's moderate volatility and typical trend duration.

The 50 EMA acts as trend filter. Price above 50 EMA = bullish major trend. Golden crosses above 50 EMA are stronger signals (aligned with trend). Counter-trend crossovers have lower probability.

Primary exit: opposite crossover (death cross exits long, golden cross exits short). Alternative: close below 21 EMA (longs). Also exit on stop hit (2× ATR) or time stop (25 days).

Use ADX filter - only trade when ADX > 20 (trending market). Check EMA spread - very close EMAs indicate ranging. Wait for price confirmation (close beyond both EMAs). Avoid trading during oil consolidation.

ADX measures trend strength. When ADX < 20, market is ranging and crossovers whipsaw (fail frequently). Requiring ADX > 20 filters out ranging conditions, significantly improving win rate.

Shell is world's largest LNG trader. Oil alone misses LNG-driven moves. Check Brent above its 20 EMA AND LNG direction. Both supporting Shell signal = highest conviction. Shell can outperform peers on LNG strength.

Weekly EMA position sets major bias. Daily provides entry signals. Only take daily crossovers aligned with weekly (e.g., daily golden cross when weekly EMAs already bullish). This filters out counter-trend signals.

21 EMA trail is effective - exit when price closes below 21 EMA (longs). This gives trend room to develop while protecting profits. Alternative: 2× ATR trail after reaching 2× ATR profit.

EMA spread narrowing, ADX falling toward/below 20, multiple crossovers in short period (3+ in 2 weeks), oil in consolidation. If crossover reverses within 3 bars, exit quickly - it's likely a failed signal.

Calculate EMAs with multiplier = 2/(Period+1). Detect crossover: Fast > Slow AND Fast[1] <= Slow[1]. Add filters: ADX > 20, trend alignment (> 50 EMA for long), energy filter. Exit on opposite crossover, 21 EMA trail, or stop.

Test ranges (fast 5-12, slow 18-30) with walk-forward testing. Robust parameters have similar results to nearby values. Avoid curve-fitting. 9/21 is standard and robust. Simple usually beats complex.

Buy calls on golden cross, puts on death cross for defined risk. Use 30-45 DTE. Spreads reduce cost. Shell's lower volatility = lower premiums vs BP. Use slow EMA as strike reference.

Trending (ADX > 30): Full trading, standard parameters. Ranging (ADX < 20): Skip all crossovers. Transitioning: Half size, tight stops. Shell follows energy regime - oil trending = Shell trending.

Per-trade: 2% risk. Total Shell: max 5%. Total energy: max 10%. Max concurrent EMA positions: 3 across portfolio. Track attribution by signal type, regime, and energy filter status.