Learn how to use and interpret moving averages in technical analysis. The moving average is a popular indicator used by forex traders to identify trends. A smoothed moving average does not refer to a fixed period but rather collects and enrolls all available data from the past.
Smoothed moving average is a moving average that deals with a longer period allowing for an easier price calculation and viewing and represents the combination of simple moving average and exponential moving average. As a rule of thumb the bigger the period the stronger the support and resistance level is. Especially relevant is the period the moving average considers.
A forex moving average crossover strategy signals future support and resistance levels because traders buy after a golden cross and sell after a death one. Because you are taking the averages. Now as with almost any other forex indicator out there moving averages operate with a delay.
Basically a simple moving average is calculated by adding up the last x period s closing prices and then dividing that number by x. A simple moving average sma is the simplest type of moving average. The 10 period ma and the 20 period ma.
For example let s say we have two mas. In an uptrend the faster moving average should be above the slower moving average and for a downtrend vice versa. This gives them a clearer signal of whether the pair is trending up or down depending on the order of the moving averages.
The below strategies aren t limited to a particular timeframe and. Moving averages are a frequently used technical indicator in forex trading especially over 10 50 100 and 200 day periods.
