- This topic has 228 replies, 226 voices, and was last updated 2 years, 7 months ago by
.
-
Posts
-
Moving average is a technical indicator which optimizes our technical analysis to support the trend and to find support & resistance. It smooth-ens the fluctuating line chart with mean average of the selected period for ready reckoning the price movement. The average line is the line of equilibrium where the price get attracted towards it and then gets repelled either direction. It works exceptionally well in trending zones and not useful in non trending zones.
If the current price is above the MA line its bullish trend and below is bearish trend.
There are two type of MA, simple moving average & Exponential moving average, SMA takes the simple mean average of closing prices for the selected period whereas the EMA takes the average strength from the recent prices. SMA will give more smoother line but slow in responding to current price movement but EMA is more responsive to current price movement. SMA is used for long time trend and EMA is used for short term trend.
Average price of a particular time period.
SMA – is use for long term trend.
EMA – is use for short term trend.
<div class=”bbp-reply-content”>
- It is only an indicator of the trend. Decision making cannot take place by using it.
- The bullish or bearish trend can be know by this.
- 21days moving average is taken and above it the trend is bullish and below it the trend is bearish.
</div>
moving average is a technical indicator which helps in identifying the trend i.e. either bullish or bearish. It takes around 21 days to a month time.Mostly it shows a sideways movement. The trend is positive when the price goes below the average and it is positive when the price goes above the average.
Moving average can applied for short term (21days price movement). It works during trending, not support sideways movement.
Bullish trend:
The trend is positive till the current market price is above the average.
Bearish trend:
The trend is negative till the current market price is below the average.
- You must be logged in to reply to this topic.
