There are currently three general moving averages in the market: arithmetic moving average MA, weighted moving average WMA, and exponential smoothing moving average EMA. Most investors use exponential smoothed moving averages and apply them to chart analysis.
Moving averages are classified by time, and usually parameters have different periods such as 5, 7, 9, 10, 30, and 50. The shorter the period of the moving average, the more violent the exchange rate fluctuations. The longer the cycle, the more stable the response trend. According to the length of the moving average time period, it is usually divided into short-term, medium-term and long-term moving averages. The short-term moving average refers to the period within 10 units, the mid-term refers to the period within 10 to 20 units of time, and the long-term refers to the period over 20 units.
Usually people choose multiple moving averages for analysis and judgment. The method used selects one short-term, medium-term and long-term moving average. When the short-term moving average has a large angle, the mid-term or long-term moving average is uploaded to indicate a buy signal. The golden cross. The short-term moving average has a large angle, and when the angle passes down the mid-term or long-term moving average, it is expressed as a sell signal. Also called death cross.
Moving averages are applicable to various times and graphs. Such as one minute, five minutes, one hour, four hours and daily chart. But in a specific transaction, the graphics below one hour have little effect. Buy and sell signals are given frequently, and many of them are false positives. So try to use longer graphics.
Since the moving average can indicate the trend direction, it has the characteristics of a trend. The moving average is not like the daily line, which fluctuates up and down, but rather smoothly. The upward one usually rises slowly, and the downward one usually falls slowly. Therefore, it has stable characteristics. The longer-term moving average is not easy to go up or down. The rising trend of the exchange rate must be truly clear before the moving average will extend upward, and often before the exchange rate starts to fall, the moving average is upward. When the exchange rate declines significantly, the moving average will go down.
All in all, the shorter the moving average, the worse its stability, and the longer the long-term moving average, the stronger its stability. The analysis method of moving average can only help us to judge the general trend of the market and the timing of the change.