Medium-Term Trade Strategy

Medium-term moving average strategy will use the 50 period MA.

The 50 period MA acts as support resistance level for the Indices price.

In an upwards Stock Index trend the 50 period MA will act as a support, Indices price should always bounce back up after touching the MA. If the Indices market closes below the indicator then this will be an exit trading signal.

50 Moving Average Period Support - Indices Trade Strategy Examples

In a down Stock Index trend the 50 period MA will act as a resistance, Indices price should always go down after touching the moving average. If the Indices market closes above the indicator then this is an exit signal.

50 Moving Average Period Resistance - Indices Trading Strategies Examples

50 Day Moving Average Indices Trade Analysis

As the Index trend moves up, there is a key line you want to watch - this is the 50 day Indices moving average. If the market stays above this 50 day Indices moving average moving average, that is a good signal. If the market falls below 50 day Indices moving average in heavy volume, then watch out, because there could be Index trend reversal signal ahead.

A 50 day MA Indices indicator takes 10 weeks of market data, and then plots the average. The moving line is recalculated each day. This will show the Indices trend - it can be up, down, or sideways.

You normally should only buy when Stock Index prices are above their 50 day Indices MA. This tells you the prevailing market direction is trending upward. You always want to trade with the Indices trend, & not against it. Many traders only open orders in the direction of the price trend.

Index prices normally will find support over & over again at this 50 day Indices moving average. Big and Large investment institutions such as mutual funds, pension funds, and hedge funds watch this level very closely. When these big volume entities spot a trend moving down to its 50 day line, they see it as an opportunity, to add to, or begin and start a new trade position at a sensible level.

What does it mean if your price moves downwards & slices through its 50 day line. If it happens on heavy volume, it's a strong signal to sell. This means big institutions are selling their share, & that can cause a dramatic drop, even if fundamentals still look solid. Now, if your price drops slightly/a little below 50 day line on light volume, watch and monitor how it reacts in the coming days, & take appropriate action if necessary.

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Trade Forex Trading

Medium-Term Trade Strategy

50 Day Moving Average Indices Trade Analysis