At MoneyWiseMind, our team has spent
years refining a practical and reliable strategy that has consistently
delivered profitable trades, especially for medium to long-term holding
periods. Today, we're pulling back the curtain to reveal one of our most
trusted trading techniques: the Weekly 20 EMA Breakout Strategy
combined with RSI.
This method is built on simple tools, easy-to-follow
rules, and most importantly strict discipline. Whether you're a
retail investor or an aspiring swing trader, this strategy could become a
game-changer in your journey.
Why this Strategy
In a world flooded with complicated systems and noisy
indicators, we chose to keep it simple yet effective. This strategy only requires:
A candlestick chart (weekly
timeframe)
The 20 EMA (Exponential Moving
Average)
The RSI (Relative Strength Index)
These tools are available for free on
almost every trading app, so there is no need for expensive subscriptions
or fancy software.
What makes this strategy powerful is its ability
to filter strong trending stocks that are showing renewed
momentum on higher timeframes—ideal for holding periods between 3
to 6 months. And yes, we’ve had trades where the target hit within
a single candle, i.e., just one week of entry.
Core Concept of the
Strategy
This trading technique is rooted in two technical
indicators:
Weekly 20 EMA Breakouts:
When a stock closes
above its 20 EMA on the weekly timeframe, it is a strong indication that
buyers are gaining control. A consistent close above this line typically
signifies the start of a new uptrend or a continuation of an existing bullish
phase.
RSI Confirmation:
We only consider
going long when the RSI is above 60 on the same weekly chart.
This additional filter ensures we are entering only those trades where momentum
is already in favor of buyers.
Together, this combination helps us capture trades
that have both trend and momentum working together—one of the
highest-probability setups in technical analysis.
Entry Rules: When
to Buy
Here’s how we define a valid buy setup:
Use the weekly candlestick chart.
Add 20 EMA to the chart.
Plot the RSI (14 days look back period)
We avoid default 70/30, instead we take 60/40 setup.
When the weekly candle closes above the 20
EMA, and RSI is above 60, we enter the trade in the
next candle's high.
Note: RSI above 60 is our first
criteria. But sometimes RSI above 50 can be considered.
The trade is expected to run for a minimum
of 10/20 weeks or until your target is met.
Exit Rules: When to
Book Profit or Cut Losses
Stop-Loss Strategy:
We are strict with our stop-loss rules. If the
price closes below the 20 EMA on any subsequent weekly candle,
we exit the position immediately, no questions asked.
This can happen after just one candle,
or after 4–5 weeks.
We may also choose to define our stop-loss based
on risk appetite or recent swing
Target Booking:
If our target is met early—say within
one candle (1 week) or a few candles (3–5 weeks)—we book partial or
full profit as per our trade management plan.
Trailing Stop:
For strong runners, we may trail our
stop-loss below each new weekly low or use moving averages like the 10
EMA to lock in profits. This allows us to ride bigger trends when the stock
keeps climbing.
The Roll of Market
Conditions
Even the best strategies can fail in a weak or
highly volatile market. That’s why we always check the broader market
trend—Nifty, Bank Nifty, or sector indices—before executing any trade.
Favorable broader market = higher
success rate
Weak market sentiment = cautious
entry or reduced position size
Key Psychological and Risk Guidelines
This extra step helps us avoid trades that might
look technically perfect but are prone to failure due to overall bearishness.
Before jumping into this strategy, here are a few
golden rules we always follow:
No strategy is fool proof- accept small
losses as part of the process.
Psychology is 80% of trading. Without
discipline and emotional control, even the best strategy will fail.
Position sizing is everything. Don’t risk
more than 1–2% of your capital on a single trade.
Journal every trade Track the
reason for entry, stop-loss, result, and your emotions throughout.
Real -Time Examples:
Let's look below some real-time examples with
charts that follow this exact strategy:
See the above weekly chart of LT:
Weekly closing was above 20 EMA with RSI at 62 plus
on 1st week of June, 2023.
Entry triggered on the following week at ₹ 2370
Stop loss was previous candle's close or low of the
triggered candle or as per one's risk appetite.
Trade closed after closing the red candle below 20
EMA line on the last week of October, 2023 at ₹ 2897. A gain of ₹ 527 within 19
weeks.
See the above weekly chart of BSE Ltd.:
Weekly closing was above 20 EMA with RSI at around
59 on 3rd week of August, 2024.
Entry triggered on the following week at ₹ 933.
Stop loss was previous candle's close or low of the
triggered candle or as per individuals risk appetite.
Trade closed after closing of a red candle below
the 20 EMA line on the 1st week of January, 2025 at ₹ 1797.A gain of ₹ 864
within 19 weeks.
Weekly closing was above 20 EMA with RSI at 69 plus
on 3rd week of February, 2021.
Entry triggered on the following week at ₹ 295
Stop loss was previous candle's low or low of the
triggered candle or as per individuals risk appetite.
Trade closed on 2nd week of July, 2021 at ₹ 608.A
gain of ₹ 300 plu points within 21 weeks.
Why
This Strategy Works
Higher timeframe = stronger signal. Weekly charts reduce noise and
fake outs.
Combining trend + momentum increases accuracy.
Clear entry and exit rules avoid emotional trading.
Works across sectors and market caps, as long as liquidity is good.
Final Thought: Keep
Your Charts Simple, Stick to your Plan
This strategy is not about catching every market
move. It’s about catching clean, high-probability setups with
solid risk management.
If you follow the rules with discipline, practice
analyzing so many charts, maintain your emotional control, and avoid
overtrading, this setup can deliver consistent results over time.
Remember: No strategy is 100%
successful. Even this one will have its losses—but with controlled
risk, those losses won’t hurt your portfolio.
Disclaimer: The information provided on MoneyWiseMind is for educational and informational purposes only. It is not intended to be financial advice, and you should not rely on it as such. Before making any financial decisions, you should consult a licensed financial advisor.
