Simple Moving Average Trading Strategy

Plus selecting the right moving average →

Hey there!

Today we’ll be discussing how we can use moving averages to identify and analyze trends.

A moving average is derived by summing up the price of the stock over a specific time period and dividing the total by the number of data points to arrive at an average. It is used to determine the direction of the trade.

If the prices are above the moving average, it is a bullish signal, and if the prices are below the moving average, it is a bearish signal.

📌 Trend + Patterns Supporting the Trend = Better Results

Pull-back setup (bullish): In this strategy, we will enter the trade when the prices are above the moving average and form a bullish pattern like the piercing pattern, a bullish harami, etc.

Pull-back setup (bearish): Conversely in the strategy’s bearish version, we will enter the trade when the prices are below the moving average and form a bearish pattern like a dark cloud cover, a bearish engulfing pattern, etc.

The closer the candles are to the moving average, the stronger the signal.

Here’s which moving average you can rely on depending on the time frame you’re comfortable trading in:

Note: In the sideways market, you must mark the support and resistance level, trading only when you see a breakout.

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💰 He generated 200% returns in just 28 trades!

Learn Mr. Kaushik Akiwatkar’s Price Action Options Strategy, where he used moving averages and market structures to generate 200% returns with just 28 trades in the year 2022!

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None of the above stock ideas are intended as recommendations. Please consult a registered advisor before buying/selling.

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