Stock Indices Moving Average Support and Resistance Levels Trading Strategy

Moving Averages can be used as points of support and resistance on Stock Indices charts.

When Stock Indices price reaches the moving average, the Moving Average level can act as a point of support or resistance for the Stock Indices price.

Buy Signal

If price is on an upward Stock Indices trend and starts to retrace, then most Stock Indices traders might wait to buy at a better Stock Indices price when the price hits a support level. Traders will sometimes use the Moving Average to determine the support level.

A buy Stock Indices trading signal is generated when price hits the Moving Average, turns and starts moving in the upward Stock Indices trend direction. The Stock Indices trading signal is confirmed when Stock Indices price closes above the MA. Because many Stock Traders use the moving averages to generate trading signals, price will normally react to these levels.

A stop loss should be set just below the Moving Average Indicator. Ideally it should be set a few pips below the previous low.

Buy Signal - How to Trade Stock Indices with Moving Average Strategy

Sell Signal

If the Stock Indices price is on a downward Stock Indices trend and starts to retrace, then most Stock Indices traders might wait to sell at a better price when the Stock Indices price hits a resistance level. Traders will sometimes use the Moving Average to determine the resistance level.

A sell Stock Indices trading signal is generated when price hits the Moving Average, turns and starts moving in the downward Stock Indices trend direction. The Stock Indices trading signal is confirmed when price closes below the MA. Because many Stock Traders use the moving averages to generate trading signals, price will normally react to these levels.

A stop loss should be set just above the Stock Indices moving average indicator. Ideally it should be set a few pips above the previous high.

Sell Signal - How Do I Trade Stock Indices with Moving Average Strategy

Resistance Level turns Support Level

In Stock Indices Trading - When a resistance level is broken it turns into support and vice versa.

This happens when the fundamentals of a Stock Indices trend change and consequently the direction of a stock index chart. The direction change is reflected by the moving average Stock Indices indicator, the direction is confirmed when the resistance turns into support or vice versa (when support turns into resistance)

Resistance Level turns Support Level - Moving Average Stock Indices Trading Strategy Example