MA Support & Resistance Areas
MAs can be used as points of support & resistance on charts.
When price reaches the MA moving average, the MA level can act as a point of support or resistance for the price.
Buy Trading Signal
If price is on an upward trend and starts to retrace, then most traders may wait to buy at a better price when the price touches a support level. Traders will sometimes use the MA to determine the support zone.
A buy signal is generated when price hits the Moving Average, turns & starts heading in the upwards trend direction. The signal is confirmed when price closes above the MA Moving Average. Because many traders use the Moving Averages 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 set a few pips below the previous low.
Buy Signal - How to Trade with Moving Average Strategy
Sell Trading Signal
If the price is on a downwards trend & starts to retrace, then most traders might wait to sell at a better price when price hits a resistance zone. Traders will sometimes use the Moving Average to determine the resistance zone.
A sell signal is generated when the price hits the MA, turns and starts heading in the downward trend direction. The signal is confirmed when the price closes below the MA Moving Average. Because many traders use the MAs to generate trading signals, price will normally react to these zones.
A stoploss order should be set just above the moving average MA trading indicator. Ideally it should be set 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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