MA Support & Resistance Areas
MAs can be used as points of support and resistance on charts.
When price reaches the MA MA, the MA level can act as a point of support/resistance for the price.
Buy Trading Signal
If the price is on an upward trend & starts and begins to retrace, then most traders may wait to buy at better price when the price touches a support level. Traders will sometimes use the MA Moving Average to determine the support zone.
A buy signal is generated/derived when price hits the Moving Average, turns and starts heading and moving in the upward trend direction. The signal is confirmed when price closes above the MA Moving Average. Because many traders use the MAs to generate trading signals, price will normally react to these zones.
A stoploss should be set just below the Moving Average Indicator. Ideally it should be placed a few pips below the previous low.
Buy Trading Signal - How to Trade with Moving Average Strategy
Sell Trading Signal
If the price is on a downwards trend and starts to retrace, then most traders might wait to open a sell at a better price when price hits a resistance zone. Traders will sometimes use the Moving Average to figure out the resistance zone.
A sell signal is generated when the price hits the MA, turns and starts heading and moving in the downwards trend direction. The signal is confirmed when the price closes below the MA Moving Average. Because many traders use the MAs to generate signals, price will normally react to these zones.
A stoploss order should be placed just above the moving average Moving Average trading indicator. Ideally it should be placed a couple of pips above the previous high.
Sell Signal - How to Trade with Moving Average Strategy
Resistance Area turns Support Area
In Gold - When a resistance zone is broken it turns into support and vice versa.
This happens when the fundamentals of a trend change and consequently the direction of a xauusd. Direction change is reflected by the moving average indicator, the direction is confirmed when the resistance zone turns into support level or vice versa (when support area turns into resistance level)
Resistance Level turns Support Level - Moving Average Strategy Example
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