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Shifting movement average The advantages and disadvantages of using moving averages need to be weighed. The moving average is a trend-following or lagging indicator that always keeps it behind. However, this is not necessarily a bad thing. After all, the trend is your friend, and it is best to trade in the direction of the trend. Moving averages ensure that traders stay in line with the current trend. Although trends are your friend, securities spend a lot of time in trading ranges, which makes moving averages invalid. Once in a trend, the moving average will get you in, but it will also signal a later date. Don't expect to use moving averages to sell at the top and buy at the bottom. Like most technical analysis tools, moving averages should not be used alone, but should be used in combination with other complementary tools. Charts experts can use moving averages to define the overall trend and then use RSI to set justice overbought or oversold levels. Trend identification Shift the direction of moving average lines convey important information about the price, regardless of whether the line is a simple average or index. A rising moving average indicates that prices are generally rising. A falling moving average indicates that prices are falling on average. The rise of the long-term moving average reflects the long-term upward trend. The decline in the long-term moving average reflects a long-term downward trend. Shifting movement average - Chart 4 The above diagram shows the 3M ( MMM ) and 150 days index shifting movement average. This example shows the operation of the moving average when the trend is strong. For a period of 150 days EMA in 2007 Nian 11 months and 2008 Nian 1 fell again months. Please note, fell 15 % to twist direction turn this moving average. These lagging indicators can be determined Time (worst case) after (preferably) or the reversed tendency occurs. MMM who continued lower to 2009 Nian 3 months, then surged 40-50 %. Please note that until after the surge, 150 Tian EMA was out now. However, once successful, MMM will continue to rise in the next 12 months . The moving average performs well in a strong trend. Double frequency division Two may be shifted using the average value of a start signal to generate a cross. In the "Financial Market Technical Analysis", John - Murphy ( John Murphy ) says it is " double-cross method " . CROSS relates to a dual phase for a short moving average and a relatively long moving average. Like all moving averages, the total length of the moving average defines the time frame of the system. Make use . 5 days EMA and 35 days EMA -based system will be considered short-term system. Use 50 Tian SMA and 200 Tian SMA tie system it will be considered mid or even long-term. When the shorter moving average exceeds the longer moving average, a bullish crossover will occur. This is also called the golden cross. When the shorter moving average is lower than the longer moving average, a bearish crossover occurs. This is called the death cross. Shifting movement produces a relatively late average cross signal. After all, the system uses two lagging indicators. The longer the moving average period, the greater the lag of the signal. When a good trend occurs, these signals come into play. However, in the absence of a strong trend, the moving average crossover system will generate a lot of whips.
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