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Beginner's Guide To Moving AveragesMoving averages are without a doubt the most popular trading tools. Moving averages are great if you know how to use them but most traders, however, make some fatal mistakes when it comes to trading with moving averages. In this article, I show you what you need to know when it comes to choosing the type and the length of the perfect moving average and how to use moving averages when making trading decisions. What is the best moving average? EMA or SMA? In the beginning, all traders ask the same questions, whether they should use the EMA (exponential moving average) or the SMA (simple/smoothed moving average). The differences between the two are usually subtle, but the choice of the moving average can make a big impact on your trading. Here is what you need to know: The differences between EMA and SMA There is really only one difference when it comes to EMA vs. SMA and its speed. The EMA moves much faster and it changes its direction earlier than the SMA. The EMA gives more weight to the most recent price action which means that when the price changes direction, the EMA recognizes this sooner, while the SMA takes longer to turn when the price turns. Pros and cons – EMA vs SMA There is no better or worse when it comes to EMA vs. SMA. The pros of the EMA are also its cons – let me explain what this means: The EMA reacts faster when the price is changing direction, but this also means that the EMA is also more vulnerable when it comes to giving wrong signals too early. For example, when the price retraces lower during a rally, the EMA will start turning down immediately and it can signal a change in the direction way too early. The SMA moves much slower and it can keep you in trades longer when there are short-lived price movements and erratic behavior. But, of course, this also means that the SMA gets you in trades later than the EMA. What is the best period setting? When you are a short-term day trader, you need a fast-moving average that reacts to price changes immediately. That’s why it’s usually best for day traders to stick with EMAs. On the other hand, Swing traders have a very different approach and they typically trade on higher time frames (4H, Daily +) and also hold trades for longer periods of time. Thus, swing traders should first choose an SMA and also use higher period moving averages to avoid noise and premature signals. The best moving average periods for day-trading 9 or 10 periods: Very popular and extremely fast-moving. Often used as a directional filter (more later) 21 period: Medium-term and the most accurate moving average. Good when it comes to riding trends 50 period: Long-term moving average and best suited for identifying the longer-term direction The best periods for swing trading 20 / 21 periods: The 21 moving average is my preferred choice when it comes to short-term swing trading. During trends, price respects it so well and it also signals trend shifts. 50 period: The 50 moving average is the standard swing-trading moving average and is very popular. Most traders use it to ride trends because it’s the ideal compromise between too short and too long term. 100 period: There is something about round numbers that attract traders and that definitely holds true when it comes to the 100 moving average. It works very well for support and resistance – especially on the daily and/or weekly time frame. 200 / 250 period: The same holds true for the 200 moving average. The 250 period moving average is popular on the daily chart since it describes one year of the price action (one year has roughly 250 trading days) How to use moving averages Trend direction and filter you can use a fast EMA to stay on the right side of the market and filter out trades in the wrong direction. Just this one tip can already make a huge difference in your trading when you only start trading with the trend in the right direction. The Golden Cross and the Death Cross But even as swing traders, you can use moving averages as directional filters. The Golden and Death Cross is a signal that happens when the 200 and 50-period moving average cross and they are mainly used on the daily charts. In the chart below, I marked the Golden and Death cross entries. Basically, you would enter short when the 50 crosses the 200 and enter long when the 50 crosses above the 200 period moving average. the screenshot shows that during the last bitcoin cycle if you stuck to the moving averages you would have been profitable most of the time both in the long and short directions. Also please notice how when the market is moving sideways it's not favorable to use the moving averages. I will end this article here, I hope you now have a better understanding in moving averages and how to utilize them to follow the trend.
INDEX:BTCUSDEducation
by m3rr0r
EURUSD shortI am personally short the EURUSD at the start of the London session. If you are looking for a Bullish scenario then maybe follow Credit Suisse who say Support is seen at 1.0510 initially, with the low from Friday and 13-day exponential average at 1.0428/1.0397 ideally holding on a closing basis to keep the immediate risk higher. A close lower can see a deeper setback to 1.0305/1.0290. The Credit Suisse House View is neutral on EURUSD on a 3-6 month horizon. We stay bullish for key retracement resistance at 1.0612/15. Support is seen at 1.0510, then 1.0428.
Short
by Macrobriefing
USDJPY trailing stops, EURJPY short comingThe yen’s up by nearly 8% against a correcting dollar, and by more than 10% against all the Latam currencies which have been the best FX performers this year. Back in 1998, USD/JPY was halfway through a correction that took it almost back to 100, after rallying from just above 100 to just below 1 150 in1996/1997, and then falling back in 1998/1999. A cynic might point out that US/JPY has averaged 108 over the last 30 years, gyrating in the 75-150 range. All sound and fury, but not actually signifying much! Purchasing Power Parity was never of any use for forecasting but on that basis, USD/JPY was, until a few weeks ago, a chapter relative to the dollar than it has been at any point since the end of Bretton Woods. Over 50 years, USD/JPY has averaged 150, PPP has averaged 170. A 20% JPY overvaluation. From there 40% undervalued is an extreme move and while we can understand why it happened, the potential for a whipsaw correction similar in magnitude to what we saw in 1998/1999, 2002/2004, 2007/2011, or 2016, is clear. Japanese investors have been significant sellers of foreign bonds this quarter, hardly surprising but a positive for the yen on days when geopolitics, energy prices, and the BOJs current policy stance aren’t dominating the market. The story this morning (and catalyst for the yen’s bid, focuses on anti-Covid-Zero protests in China, which have punctured some of the re-opening optimism and hurt risk-sensitive currencies everywhere but AIUD, NZD, and KRW in particular. AUD wasn’t helped by weak retail sales., either. The euro started slowly but has found a bid amid ongoing slightly hawkish ECB rhetoric. Ahead, we have CPI data this week (Germany tomorrow, EZ on Wednesday) and we expect lower core inflation for the Eurozone, and I’m not confident of a break in EUR/USD 1.05 (which would drag money into the euro) but will be watching. EUR/GBP is currently failing to break lower, which may mean GBP short covering is all but complete, though sentiment is bad enough to prove sterling with more support than it deserves. The rest of the week will see attention on Friday’s labor market data in the US and Canada, month-end, and football. © Sociéte Genérale The USDJPY has been falling along with yield curves and oil. The yen is clearly strengthening as the drag effect of monetary policy and the energy crisis wains. But it could also be the canary in the coal mine that reflects the market's mood around China and the disruptions happening there. The yen is a safe haven currency and usually, the yen is the indicator that not all is well in the world. Though the US dollar has been the ultimate safe haven due to the rate differentials. The market is trying to tell us something. The EURJPY is about to follow the USDJPY and this means we could potentially have a trend trade about to start.
Short
by Macrobriefing
2
#EURCHF bearish move possibility from 2 areaAs you can see in the chart bearish impulsive move followed by a corrective bullish move which shows price intention of moving lower after completing its corrective move. now in this case we need to be looking for an area where corrective move may end. for a bearish move to resume price need to take out enough liquidity in order to move down, as it can be seen in the chart 2 areas are close to price with enough liquidity resting above it. the closer is above the previous candle in the form of bearish engulfing and the further out area is a local top which formed in the bullish corrective move which price already test it twice and there are huge amount of liquidity there. For taking a position from any of these 2 areas you need to remember: that price need to tap into a area clearly. but unable to close above the area. also it is possible that price fail to reach the zone but to engage in a position it should fit your strategy.
Short
by mohemati
Will The EURUSD Re-Enter Consolidation?The EURUSD went on a 25% decline in 2014 through to 2015. WIth such a steap drop in only a matter of months, it was only natural that price would fall into a long period of consolidation. The consolidation period lasted much longer than anticipated. It lasted for 7 years and we eventually saw price break through the consolidation support in July this year. Price even declined below the 1.0000 round number only to come back up and retest the support turned resistance level at 1.0462. If this is just the beginning of a long-term bear trend then we should eventually see a reversal at the current resistance level. The EURUSD does trend really well, and in a short period of time so if a trend does unfold, it will require you to be alert and ready as a trend in the forex market can be easily missed. The current resisatance level also has the daily 200 simple moving average acting as resistance. The first contact was made on November 15th and again on November 23rd. All signs are indicating impending weakness. Keep following our posts for continuous updates. If you enjoyed this post, make sure to like, and follow for more quality content! If you have any questions or comments, comment below. We reply to every comment! See below for more information on our trading techniques. As always, keep it simple, keep it Sublime.
by Sublime_Trading
Knowing if a trend is still valid or is beginning to failin the above image you can see, that when all moving averages do not cross or overlap one another, this indicates a strong trend/price sentiment in this direction, even after a major pullback, you'll notice the moving averages still dont cross or overlap. also on the chart image ive touched upon the very popular 1, 2, 3 trading pattern and highlighted that there's a not so obvious 4 reset wave before the 1, 2, 3 pattern starts again, the trick is check to see if the phase 4 wave causes any of the moving averages to cross/overlap before setting up your 1, 2, 3 move! because if they have crossed or one of them is overlapping the other, this signals the trend is weakening and the market may be looking at beginning a range or and new trend in the opposite direction.
Education
by algoquantix
AAPL: Be AWARE of the KEY SUPPORT level!• Since our previous analysis, AAPL has been trading above a key support level, around the $147 (link to my previous analysis is below this post); • The $147 is a multiple bottom area, as seen in the 1h chart, while it is the 21 ema in the daily chart, slightly above the 38.2% retracement; • Therefore, the $147 is the most important support level, in my reading, and only if AAPL loses it, we would see a sharper drop – in this scenario the $141 at the 61.8% retracement would be our target; • For now, it seems AAPL maintains its bull trend. Let’s pay attention to its key support level for now. I’ll keep you all updated on this, as usual. Remember to follow me to keep in touch with my analyses!
NASDAQ:AAPL
by Nathan_The_Finance_Hydra
W Bottom to Momentum Run Example: CATWeekly Chart of CAT: this is one of the Dow components that is nearing its previous all-time high resistance levels. It is one of the first few Dow 30 stocks to challenge prior all-time high prices. Caterpillar Inc. has been running with momentum that will now pause or stall at this level. Now, watch to see which support level holds as profit-taking continues. This is NOT a trading range but an intermediate-term correction ending with a W bottom. Important to note the differences. A bottom after a correction tends to set up for momentum runs that can sustain longer than they do within a trading range.
NYSE:CAT
by MarthaStokesCMT-TechniTrader
1
USDJPY range boundUSDJPY is the only pending order I have at the London Open today. The consolidation is growing and the energy will be building for a breakout soon enough. The Daily trend has been lower of late and the higher time frame has a Bear Flag pattern that is growing the longer the consolidation occurs, with a target for TP1 @ 135.86 Currency pairs have been reversing their daily momentum this week, so I am leaving the USDJPY to buy on too. Just in case this is not a consolidation before a breakdown but an accumulation phase.
by Macrobriefing
AUDJPY Potential Buying Opportunity!Hello Traders, In this Today's trading session we will be monitoring AUDJPY for a Buying opportunity in and around 93.6 OB zone. Once we get a bearish confirmation the trade will be executed and shared with our premium subscribers! - RISK DISCLOSURE TRADING IS NOT SUITABLE FOR EVERYONE. TRADING FOREX INVOLVES HIGH RISKS AND CAN CAUSE YOU A COMPLETE LOSS OF YOUR FUNDS! Trading foreign exchange on margin carries a HIGH LEVEL OF RISK, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose! The high degree of leverage associated with trading currencies means that the degree of risk compared to other financial products is higher. Leverage (or margin trading) may work against you resulting in substantial loss. And feeling a sensation similar to getting sucker punched in the stomach. There is considerable exposure to risk in any off-exchange foreign exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Market Opinions BigGainLTD will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. YOU are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs. Internet Trading Risks There are risks associated with utilizing an Internet-based deal execution trading system including, but not limited to, the failure of hardware, software, and Internet connection. Since BigGainLTD does not control signal power, its reception or routing via Internet, configuration of your equipment or reliability of its connection, we cannot be responsible for communication failures, distortions or delays when trading via the Internet. Distribution This site is not intended for distribution, or use by, any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or investments referred to in this website are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of visitors to this website to ascertain the terms of and comply with any local law or regulation to which they are subject.
Long
by BiggainLTD
4