Moving Average Support & Resistance Levels
MAs can be used as points of support and resistance on charts.
When price reaches and gets to the MA moving average, the MA(Moving Average) level can act as a point of support or resistance for the market price.
Buy Signal
If the price is on an upwards trend & begins to retrace, then most traders may wait to open buy at better price when price touches/tests a support level. Traders will sometimes use the MA to figure out the support level.
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 set just below the Moving Average Indicator. Ideally it should be set and placed a couple of pips below the previous low.
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 set just above the moving average(MA) indicator. Ideally it should be set a few pips above the previous high.
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 fundamentals of a trend change and consequently the direction of a currency pair. The direction change is reflected by the moving average trading indicator, the direction is confirmed when the resistance zone turns into support zone or vice versa (when support level turns in to resistance level)
Resistance Level turns Support Level - Moving Average Strategy Example
More Topics:
- Stock Indices Strategy for Index Germany GER30 Index
- How Can I Use MT5 Exponential Moving Average Indicator?
- What is 1 Pip Equal to for UsTec100 Index?
- Definition of a Cent Lot Described
- How Can I Set a FX Order in MT4 Trading?
- MetaTrader 4 Online Terminal Trading Software Guide
- How to Use MT5 Triple Exponential Moving Average TEMA Indicator
- NKY225 Trading System
