Assignment Help, Cloud Based ERP System, Microsoft NAV Certification
WELCOME !!

Please Register, ask for assignment solutions & post the solutions if you know any.

LETS START POSTING YOUR IDEAS AND THOUGHTS AND BUILD THE COMMUNITY OF EXPERTS.

Assignment Help, Cloud Based ERP System, Microsoft NAV Certification

Stock Market, Online Tutoring, Cloud Based ERP System, Microsoft Dynamics Reporting, Microsoft Nav Certification


You are not connected. Please login or register

View previous topic View next topic Go down  Message [Page 1 of 1]

1 Moving Averages Combined on 30th September 2013, 3:56 pm

Formatted

avatar
Administrator
Learn how to trade Forex. Learn how to trade commodity market. Learn How to trade Gold/ Silver.
The location of the price relatively to the moving average can be used to identify the trend. If the price is above the moving average(s), the trend is considered to be up. If the price is below the moving average(s), the trend is considered down. This is a pretty straightforward technique.
The following EUR/USD chart shows that buy and sell signals could be generated by crosses above and below the moving average. But that would be too simplistic. Let's filter out some signals with the RSI oscillator. In the example below the goal was to find breakouts of the 200 simple moving average, confirmed by pullbacks. The RSI confirmed those pullbacks by retracing to its 50% line. The first two breakouts of the SMA were short-lived, but the third was a clear winner. All the breakouts which were not confirmed by price action and sustained by the RSI were simply ignored.
[You must be registered and logged in to see this image.]
Another technique for trend identification is based on the location of the shorter moving average in relation with to the longer moving average. If the shorter moving average is above the longer moving average, the trend is considered up. If the shorter moving average is below the longer moving average, the trend is considered down. In the example below, the 21 SMA acted as a filter reducing the number of signals from 3 to 2.
[You must be registered and logged in to see this image.]
The classical uses of moving averages need to be carefully considered: moving averages are trend following indicators. However, currency pairs spend a great deal of time in trading ranges, which can render moving averages ineffective if only used to identify trends. This is not a problem though, then there is another reason why moving averages are widely used indicators: they behave very well as support and resistance levels.
This is usually accomplished by identifying past S&R levels and match them with the current moving average location. The 800 period simple moving average may seem very static on any chart - but still it acts very well as S&R.
In the illustration below, the pair tested the 800 simple moving average support before breaking out. Therefore, the moving average acted as a confirmation of resistance-turned-support. The break of the support made by the moving average would serve as a warning that the pair may resume the trend.
[You must be registered and logged in to see this image.]
As with most tools of technical analysis, moving averages should not be used on their own, but in conjunction with other tools that complement them. Using moving averages to confirm other indicators and analysis can greatly enhance your technical analysis skills.


_________________
REGISTER AND LOG-IN TO PARTICIPATE
START POSTING YOUR IDEAS AND THOUGHTS AND BUILD THE COMMUNITY OF EXPERTS.
View user profile http://kantipur.friendhood.net

View previous topic View next topic Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum