Posted on May 9, 2016

Forex moving average period

   However it is also crucial to point out that MA’s are best applied to ‘trending’ market conditions. When the market has a trend, it has thetendency to achieve ‘higher highs’ or ‘lower lows’ over a given period of time, and the market has a definite direction. Note: the following USD/CHF(daily) chart shows a clear trend as it has continued to accomplish new lows over a considerable period of time. When a trend exists, the market’strading activity tends to remain on one side of the MA. In a downtrend, the candlesticks remain below the MA In an up-trend; the candlesticks remainabove the MA.

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   When analyzing and speculating in the financial markets, sometimes keeping our approach as simple and logical as possible can produce the bestresults. One of the easiest and commonly used technical indicators is the Simple Moving Average. Moving averages perform just the function the nameimplies; calculating the average price of the market over a given period of time. A 20-period moving average displays the average price over the past20-candlesticks, as a 90-period moving average displays the 90-previous candles average price. Which MA (moving average) is best? We will tackle thatquestion below.

Watch Forex moving average period

Oliver Velez: The Mighty 200 MA Forex moving average period trade.

Another dynamic scalping system composed of two moving averages: the 144 period linear weighted moving average and 5 period smoothed moving average.

   On the other hand, when the market has established a ‘range-bound’ state and is unable to accomplish new highs or lows, the candlesticks have thetendency to consistently cross above and below a given MA. The AUD/USD (daily) chart below shows a typical range bound market condition, and for thatreason, a MA should not be applied to this chart. In other words, MA’s are best suited for trending markets.Forex moving average period.

Read Forex moving average period

  Where the 40-MA was ‘too long’ we have now applied a shorter MA to the same chart; in this case the 20-MA was used. Notice how the MA has now movedcloser to the candlesticks as it simply averages a smaller amount of candlesticks. In fact the candlesticks now are able to cross above and back belowthis MA indicating the MA is now in fact ‘too short’. We are searching for that MA where the market’s recent swing high was able to simply touch butnot cross over the (MA) line. It is important that we identify the MA that most closely fits the market’s trading activity because this line will beused to identify the next trade; i.e. the (next) time the market is able to re-test this MA.

   All in all, the moving averages can act as a useful tool when navigating financial markets with a definite trend and direction. Often times keepingit simple is the best policy, and moving averages can serve us well within our arsenal of technical analysis.

Demo Forex moving average period.

Another dynamic scalping system composed of two moving averages: the 144 period linear weighted moving average and 5 period smoothed moving average.

   For the purpose of simple market analysis, traders refer to certain moving averages, such as the 20, 50, 90, & 200-period(s), perhaps due tothe self-furfilling prophecy that if we believe most (other) traders will react to the 90-moving average, we should follow suit. However for ourpurposes we are going to find the MA that ‘best fits our charts’ which in turn will help identify the next possible trade. ‘Our goal is the find theMA that the candlesticks were recently able to touch, but not cross over’.

 The GBP/CHF did in fact give us the chance to sell-short again, in two separate instances following the initial test. In addition we can go back are-examine the two previous charts with the following in mind: In the case where the MA was too long, the market was not able to re-test the MA andour trade would have never been triggered. In the example where the MA was too short, the market crossed well above that MA, which in turn may havetriggered a stop-loss order. The 31-period MA proved to be ‘just right’ as the market was able to subsequently test but not cross above that MAproviding us with the chance to re-enter the trade without generating stop-loss. (Demo Forex moving average period.|)

Forex moving average period.   As the 40-MA was too long and the 20-MA was too short we continue to search for that particular line that fits the market just right. In this casethe 31-period MA proved to be the line that best ‘fit’ the market’s trend. Notice on the top-left hand corner of the chart, the candlestick’s swinghigh was able to touch but not cross above the MA, which tells us that particular setting best reflects the degree of decline over time. At this pointwe can now search for the next trade. Simply put, we may now wait for the market to ‘(re)-test and fail to break above that MA, at which time we willsell-short with the anticipation the market will eventually continue lower’.

   Below, a 40-period MA (moving average) was applied to the GBP/CHF (daily) chart. Notice on the top-left hand corner of the chart, the candlestickwas not able to touch the MA due to the fact that this MA is ‘too long’, and must be shortened. Where a 40-MA is considered to be ‘too long’ a 20-MAwould be considered shorter as it calculates a smaller amount of trading activity.