Moving averages, SMA & EMA

Moving averages is a line that smooths out the price and can help gague the general market direction

Moving averages are best used as a point of confluence and not as a single decision point (does the MA hit a zag zone or point of heavy resistance?)

 

The 50, 100 & 200 SMA can act as a support and resistance

SMA (Simple moving average)	EMA (Exponential moving average)
Average of the price over the selected time period Best for long term trends	Average of the price with more weight on the recent price Best for short term trends

MA Strategies

Golden cross / Death cross

Not a great single strategy as moving averages are a lagging indicator

• Buy when the 50 SMA crosses above the 200 SMA
• Sell when the 50 SMA crosses below the 200 SMA

 

Buying on hits

• In a trending market, using the 200d SMA can be used as a buy the dip / sell the hit opportunity

 

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General MA information

• Divergence between MA lines can help gague the strength of a trend and how far "extended" it is
• The angle of the ascent or descent of the lines can help gague how far over extended a move is
• Big money believe anything below the 200d is bad news and not worth touching, anything above is safe