There are 3 types of moving averages: Simple (arithmetic), exponential and weighted. A simple moving average (MA) is formed by computing the average price (average) on a specific number of periods (days). The exponential moving average (EMA) reduces the delay by applying more weight to recent prices relative to the old prices. The ponderamiento applied to the most recent price depends on the specified period moving average. When shorter is WFP, more weight will be applied to the most recent price. If you are unsure how to proceed, check out dahlia loeb aviat.
It can be used in the following manner: 1. to determine the trend. 2. As a sign of buying and selling (if the averages are crossed) 3. As support or resistance. To determine the trend: we can deduce an upward trend if the price of the asset or the market in general is on the moving average line.
We can deduce a downtrend if the price of the asset or the market in general is found below the moving average line. To keep in mind: of course we can not based on the moving average, only must be complemented with other indicators to take or exit a position. It is advisable to not more than 3-4 indicators, since if we look at a graphic with most indicators, can find inconsistencies to the decision to enter the market or get out of it. How buy and sell signal: moving averages we can place short (e.g. 10-20 days) and long (eg. 100-200 days). I would be telling us a buying signal when the short PM crosses toward up a long PM. On the other hand, when a short PM cut to down a long PM, he would be telling us a sell signal. As support or resistance: moving averages can act as either support or resistance, when the price approaches them. But unlike normal resistance and support levels, they do not remain in a stationary level and can also be moved on your graph. To see the articles with examples in images call a: creating assets original author and source of the article.continue reading