<Last updated 25.04.2020>
Hi! If you are interested in Forex please read carefully the below article that shows how you can make use Fibonacci Numbers and Their Value as a Technical Tool.
What are moving averages?
Most commonly used technical indicators. A simple a way to smooth out price fluctuations to help you distinguish between typical market “noise” and actual trend reversals.
Like every indicator, a moving average indicator is used to help us forecast, or speculate, future prices.
Choosing the proper Length
The “length” or the number of reporting periods including the moving average calculation affects how the moving average is displayed on a price chart.
The longer its length, the more data points that are included in the moving average calculation, which means the less any single price can affect the overall average
In this section, we first need to explain to you the two major types of moving averages:
Problem with the simple moving average: they are susceptible to spikes. On the other hand, the exponential moving average places more emphasis on what has been happening lately. When trading, it is far more important to see what traders are doing NOW rather what they were doing last week or last month.
How to Use Moving Averages to Find the Trend?
The simplest way is to just plot a single moving average on the chart. When price action tends to stay above the moving average, it signals that price is in a general UPTREND.
In an uptrend, the “faster” moving average should be above the “slower” moving average and for a downtrend, vice versa.
If the moving averages crosses over one another, it could signal that the trend is about to change soon, thereby giving you the chance to get a better entry.
Moving averages can also act as dynamic support and resistance levels.
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