MA Support and Resistance Levels
Moving Averages can be used as points of support & resistance on charts.
When price reaches the moving average, the Moving Average level can act as a point of support or resistance for the price.
Buy Signal
If price is on an upwards trend and starts to retrace, then most traders might wait to buy at a better price when the price touches a support level. Traders will sometimes use the MA to determine the support level.
A buy signal is generated when price hits the MA, turns and starts moving in the upwards trend direction. The signal is confirmed when price closes above the Moving Average. Because many traders use the moving averages to generate trading signals, price will normally react to these levels.
A stoploss should be set just below the Moving Average Indicator. Ideally it should be set a few pips below the previous low.
Buy Signal - How Do I Trade with Moving Average Strategy Method
Sell Signal
If the price is on a downwards trend and starts to retrace, then most traders might wait to sell at a better price when price hits a resistance level. Traders will sometimes use the Moving Average to determine the resistance level.
A sell signal is generated when the price touches the MA, turns and starts moving in the downward trend direction. The signal is confirmed when price closes below the Moving Average. Because many traders use the moving averages to generate trading signals, price will normally react to these levels.
A stoploss should be set just above the moving average indicator. Ideally it should be set a few pips above the previous high.
Sell Signal - How Do I Trade with Moving Average Strategy Method
Resistance Level turns Support Level
In Gold - When a resistance level is broken it turns into support & vice versa.
This happens when the fundamentals of a trend change and consequently the direction of gold. The direction change is reflected by the moving average indicator, the direction is confirmed when the resistance zone turns into support level or vice versa (when support level turns into resistance area)
Resistance Level turns Support Level - Moving Average Strategy Examples
