Moving averages (MA) in trading among the most used indicators. They are easy to set up and easy to interpret.
Simple, the moving average only measures the average move of value during a certain time period. It facilitates price data to see the trends and trends of the market.
How to use Moving Averages
Moving averages is a trend indicator. In addition to its straightforward work, there is too much to tell a moving average: The average moving average in foreign currency is used to determine:
- Up, down or sideways – Price direction
- Trading Bias: Above Moving Average – Buy, Down Moving Average – Sell. Price Position
- Price Momentum – Angle of moving average: Increasing angle – Momentum catch, falling angle – Momentum pause or stops.
- Resistance Level / Price Support
Types of Moving Averages
SMA – Simple Moving Average – Indicates the average value for a given time period.
EMA – Exponential Moving Average – Prioritizes recent data, thus responding to price change faster than Simple Moving Average.
WMA – Weighted Moving Average – emphasizes the need to minimize recent data on older data.
Most common Moving Averages
200 EMA and 200 SMA
20 EMA and 20 SMA
10 EMA and 10 SMA