Stock Index MA Moving Average Support & Resistance Levels Trading Strategy

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

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

Buy Signal

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

A buy signal is generated when price hits the MA, turns & starts moving in the upwards trend direction. The trading signal is confirmed when price closes above the MA. Because many Stock Index Traders use the moving averages Moving Averages to generate trading signals, price will generally react to these areaslevels.

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

Buy Signal - How Do I Trade with Moving Average Strategy

Sell Signal

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

A sell trading signal is generated when price hits the MA, turns & starts moving in the downwards trend direction. The trading signal is confirmed when price closes below the MA. Because many Indices Traders use the moving averages MAs to generate trading signals, price will generally react to these areaslevels.

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 with Moving Average Strategy

Resistance Level turns Support Level

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

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

Resistance Level turns Support Level - MA Moving Average Trading System Example