Analysis of Moving Average Technical Indicator
Indices Trend Identification
The Stock Indices moving average indicator can be used as an indicator for generating signals. A buy or sell signal is generated when price either moves above or below the moving average, respectively.
If the MA is heading upward in diagonal manner then the general market trend is upward.
If the on the other hand the MA is moving downwards in diagonal manner then the general market trend is downward.
Upward Trend/Bullish Trend
If the Moving Average is moving up, then the trend is upward & the signal generated is a buy/bullish trading signal.
As long as the price is above the moving average then the trend will remain as an upwards trend. The moving average will act as a "support level" & price action of the trade chart candlesticks should not close below the MA.
Buy Signal
When the price moves above the MA & closes above the moving average, a buy signal is generated.
Indices Traders, who want to confirm the trade signal before implementing it, should wait until the MA line turns & starts to move in an upwards trend direction. It is always best to wait for the confirmation signal so that as to reduce chances of a whipsaw.
Upward Trend - How Do I Day Trade Stock Indices: A Detailed Course to Day Trade Strategies
Downward Trend/Bearish Market
If the MA is moving down, then the trend is downward & the signal generated is a sell/short trading signal.
As long as the price is below the MA then the trend will remain as a downwards bearish trend. The Moving Average will act as a "resistance level" & price action of candlesticks should not close above the MA.
Sell Signal
When the price moves below the MA & closes below the moving average, a sell trading signal is generated.
Stock Indices traders who want to confirm the signal should wait until the MA line turns & starts to move in a downwards direction. This will reduce the chance of trading a whipsaw.
Downward Trend - How Do I Day Trade Stock Indices: A Detailed Course to Day Trade Strategies
Stock Index Range Market signals
Range Market signals can also be identified using the MA Indicator.
Moving Average MA Cross Over Method Trade System
moving average crossover method is also another trading signal generation strategy that is more favored by traders compared to the above trading signal generation strategy method. Moving average crossover trading strategy is also the simplest form of a system widely used by online traders. This MA crossover method is combined with other technical indicators to form more complex systems & trading strategies.
