Analysis of MA Indicator

Stock Trend Identification

The moving average indicator can be used as an indicator for generating signals. A buy or a sell signal is generated when the price either moves above or below the moving average indicator, respectively.

If the Moving Average is moving upward in diagonal manner then general market trend is upwards.

If the on the other hand the Moving Average is heading downwards in diagonal manner then general market trend is downward.

Upwards Trend/Bullish Trend

If the Moving Average is heading up, then the trend is upwards & the signal generated is a buy/bullish trade signal.

As long as the price is above the moving average then the trend will remain as an upwards trend. The moving average will act as a "support level" & price action of the chart candlesticks should not close below the Moving Average.

Buy Signal

When the price moves above the Moving Average and closes above the moving average, a buy trade signal is generated.

Traders, who want to confirm the trade signal before implementing it, should wait until the Moving Average line turns & starts to move in an upward trend direction. It's always best to wait for confirmation signal so as to reduce chances of a whipsaw.

Up-wards Trend - How to Day Trade Stocks: A Detailed Tutorial to Day Strategies Methods

Downwards Trend/Bearish Market

If the Moving Average is heading down, then the trend is down ward & the signal generated is a sell/short trade signal.

As long as the price is below the MA then the trend will remain as a downward bearish trend. The Moving Average will act as a "resistance level" & price action of candlesticks should not close above the Moving Average.

Sell Signal

When the price moves below the Moving Average and closes below the moving average, a sell trade signal is generated.

Traders who want to confirm the signal should wait until the Moving Average line turns and starts to move in a down ward direction. This will reduce the chance of trading a whipsaw.

Downwards Trend - How to Day Trade Stocks: A Detailed Tutorial to Day Strategies Methods

Stocks Range Market trading signals

Range Market signals can also be identified using the MA Indicator.

MA Crossover Strategy Strategy

The moving average crossover method is also another signal generation strategy that is more favored by traders compared to the above signal generation strategy method. Moving average crossover strategy is also the simplest form of a system widely used by online traders. This Moving Average crossover method is combined with other indicators to form more complex systems and strategies.