Analysis of MA Technical Indicator
Indices Trend Identification
The trading moving average technical indicator can be used as an indicator for generating trading signals. A buy or sell signal is generated when price either moves above or below the MA, respectively.
If the Moving Average is moving upwards in diagonal manner then the general market trend is upward.
If the on the other hand the Moving Average is heading downwards in diagonal manner then the general market trend is downward.
Up-ward Trend/Bullish Trend
If the MA is heading up, then the trend is upward and the signal generated is a buy/bullish signal.
As long as the price is above the moving average then the trend will remain as an upward trend. The MA will act as a 'support level' & price action of chart candlesticks should not close below the MA.
Buy Signal
When the price moves above the Moving Average and 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 Moving Average line turns & starts to move in an upward trend direction. It's always best to wait for confirmation signal to reduce odds of a whipsaw.
How to Day Trade Indices: A Detailed Guide to Day Trade Strategies Methods
Downwards Trend/Bearish Market
If the MA is heading down, then the trend is downwards and the signal generated is a sell/short signal.
As long as the price is below the MA then the trend will remain as a downward 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 Moving Average and closes below the moving average, a sell signal is generated.
Those who want to confirm the trading signal should wait until the Moving Average line turns and starts to move in a downwards direction. This will minimize the chance of trading a whipsaw.
Down-wards Trend - How Do I Day Trade Indices: A Detailed Guide to Day Trade Strategies Methods
Indices Range Market signals
Range Trading Market signals can also be identified using Moving Average Indicator.
Moving Average Crossover System Strategy
The MA cross-over method is also another signal generation strategy that is more favored by traders compared to the above signal generation strategy method. Moving average cross-over trading strategy is also the simplest form of a trading system widely used by online stock traders. This Moving Average crossover method is combined with other indicators to form more complex systems & strategies.
