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