Analysis of MA Indicator
Trend Identification
The MA can be used as an indicator for generating signals. A buy or sell signal gets generated when price either moves above or below MA, respectively.
If the MA is heading upward in diagonal manner then general market trend is upwards.
If the on the other hand the MA is heading downwards in diagonal manner then general market trend is down-wards.
Upwards Trend/Bullish Trend
If the MA is moving up, then the trend is up-ward & the signal generated is a buy/bullish signal.
As long as the price is above the moving average then the trend will remain as an upward trend. The MA will act as a 'support level' and price action of chart candlesticks should not close below the MA.
Buy Signal
When the price moves above the MA and closes above the moving average, a buy signal gets generated.
Traders, who want to confirm the trade signal before implementing it, should wait until the MA line turns and starts to move in an upward trend direction. It is always best to wait for confirmation trading signal so as to minimize chances of a whipsaw.
Up-wards Trend - How Do I Day Trade Forex: A Detailed Tutorial to Day Trade Strategies
Downwards Trend/Bearish Market
If the MA is moving down, then the trend is downward & the signal generated is a sell/short trading signal.
As long as the price is below the MA then the trend will remain as a downward bearish trend. The MA will act as a "resistance level" and price action of candlesticks should not close above the MA.
Sell Signal
When the price moves below the MA and closes below the moving average, a sell signal gets generated.
Those who want to confirm the signal should wait until the MA line turns and starts to move in a downward direction. This will minimize the chance of trading a whipsaw.
Downwards Trend - How Do I Day Trade Forex: A Detailed Tutorial to Day Trade Strategies
Forex Range Market signals
Range Market signals also can be identified using the MA Indicator.
MA Crossover System Strategy
The moving average crossover method is also another signal generation strategy that is more favored by traders in-comparison to the above forex signal generation strategy method. Moving average cross-over strategy is also the simplest form of a trading system widely used by online traders. This MA crossover method is combined with other indicators to form more complex systems & strategies.
