Each trader includes one or more moving averages in his daily operations.
But how do moving averages are used in practice?
There are 3 possible ways to exploit moving averages. Let’s see.
1) Use a moving average
In this case the moving average will take on the role of mobile support when prices are above it.
On the other hand, it will take on the role of mobile resistance when prices are below it.
2) Use 2 moving averages
In this case, the operational signals will be provided when the moving averages intersect each other.
If the fastest one bypasses the slower one from the bottom to the top, a long signal is created.
Vice versa, if the fastest one overrides the slow one from top to bottom, a short signal is created.
3) Use 3 moving averages
In this case the use is similar to that with 2 moving averages, only that there will be an operating signal of neutrality when the fast average overrides the medium speed one.
While you will have a long or short signal when the fast average bypasses the slow one.