Moving Average Support & Resistance Levels
MAs can be used as points of support and resistance on charts.
When price touches the moving average, that level can act as support or resistance for the market.
Buy Signal
When price follows an uptrend but starts to pull back, many traders wait to buy at a lower price. They enter when price reaches or tests a support level. Some use the moving average to spot that support.
A buy signal is derived & generated when price hits the Moving Average(MA), turns and starts moving in the upwards trend direction. The signal is confirmed when the price closes above the Moving Average(MA). Because a lot of traders use the MAs Moving Averages to generate trade signals, price will usually react to these zones.
A stoploss should be placed just below the Moving Average Indicator. It should ideally be placed a few pips below the previous low point.
Buy Trading Signal - How to Trade with Moving Average(MA) Method
Sell Trade Signal
If the price is on a downwards trend & starts and begins to retrace, then most traders might & may wait to sell at better price when the price touches/tests a resistance zone. Traders will sometimes use the MA to figure out the resistance level.
A sell signal is generated/derived when price hits the MA, turns & starts moving in the downwards trend direction. The signal is confirmed when the price closes below the MA Moving Average. Because a lot of traders use the MAs Moving Averages to generate trade signals, price will usually react to these zones.
A stop loss should be placed just above the moving average (MA) indicator, or a few pips above the high point from before.
Sell Signal - How to Trade with Moving Average(MA) Trading Method
Resistance Area turns Support Level
In Forex - When a resistance zone is broken it turns into support and vice versa.
This happens when the reasons behind a trend change, which then changes the direction of a currency pair. This change is shown by the moving average, and it's confirmed when the area that used to be resistance becomes support, or the other way around.
Resistance Level turns Support Level - Moving Average Strategy Example
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