{"id":44630,"date":"2013-11-26T11:03:46","date_gmt":"2013-11-26T16:03:46","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=44630"},"modified":"2013-11-26T11:03:46","modified_gmt":"2013-11-26T16:03:46","slug":"spot-high-confidence-trading-opportunities-using-moving-averages","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/11\/26\/spot-high-confidence-trading-opportunities-using-moving-averages\/","title":{"rendered":"Spot High-Confidence Trading Opportunities Using Moving Averages"},"content":{"rendered":"

Free 10-page eBook can get you started <\/span><\/h2>\n

By Elliott Wave International<\/span><\/h3>\n

The moving average<\/strong> is a technical indicator which has stood the test of time. It’s been 27 years since Robert Prechter described this vital tool in his famous essay, “What a Trader Really Needs to be Successful.” What he said then remains true today:<\/p>\n

A simple 10-day moving average of the daily advance-decline net, probably the first indicator a stock market technician learns, can be used as a trading tool, if objectively defined rules are created for its use.<\/p><\/blockquote>\n

What is<\/em> a moving average? Here’s how EWI’s Jeffrey Kennedy puts it:<\/p>\n

A moving average is simply the average value of data over a specified time period, and it is used to figure out whether the price of a stock or commodity is trending up or down.<\/p><\/blockquote>\n

He also says that you can think of a moving average as an automated trend line.<\/p>\n

A 20-year veteran of technical analysis, Jeffrey wrote “How You Can Find High-Probability Trading Opportunities Using Moving Averages.”<\/em><\/strong><\/p>\n

[Descriptions of the following charts are summaries from that eBook]:<\/p>\n

Let’s begin with the most commonly-used moving averages among market technicians: the 50- and 200-day simple moving averages. These two trend lines often serve as areas of resistance or support.<\/p>\n

For example, the chart below shows the circled areas where
\nthe 200-period SMA provided resistance<\/strong>
\nin an April-to-May, 2008 upward move in the DJIA (top circle
\non the heavy black line), and the 50-period SMA provided
\nsupport<\/strong> (lower circle on the blue line).<\/p>\n

\"\"<\/p>\n

Let’s look at another widely used simple moving average which works equally well in commodities, currencies, and stocks: the 13-period SMA.<\/p>\n

In the sugar chart below, prices crossed the line (marked by the short, red vertical line), and that cross led to a substantial rally. This chart also shows a whipsaw in the market, which is circled.<\/p>\n

\"\"<\/p>\n

Another popular moving average setting that many people work with is the 13- and the 26-period moving averages in tandem.<\/p>\n

\"\"<\/p>\n

The chart of Johnson and Johnson shows a crossover system using a 13-week and a 26-week simple moving average of the close. Obviously, the number 26 is two times 13. During this four-year period, the range in this stock was a little over $20.00, which is not much price appreciation. This dual moving average system worked well in a relatively bad market by identifying a number of buyside and sellside trading opportunities.<\/p><\/blockquote>\n

\n\n\n\n
\"\"<\/a><\/td>\nYou can read the first two chapters of this eBook FREE for a limited time.<\/strong>The first two chapters reveal:<\/p>\n