Moving Average (hereinafter - CC) is a classical tool for the analysis, it is included in all software systems, and is the founder and part of the large number of derivatives of the SS popular indicators.
Essential properties of the SS are the identification, confirmation of the presence, as well as detection of a trend reversal.
For this widely used combinations of two or three different orders of the SS. The interval between the orders given on the basis of the analyzed time period, and should consider the harmony of the natural time cycles. This means that the analysis of the combination of weekly price chart CC must be multiple, for example, the number of weeks in a month, or - 04.12.24. This ratio will show the dynamics of variance in average prices for the month, quarter and half-year.
In the analysis of the monthly schedule - times the number of months the year, such as 12-24-36.
Multiplicity can be changed, and how you like to experiment, the basic rule is - save proximity to natural cycles.
The main important factors when using combinations of moving averages:
1. Average position of different orders with respect to each other.
SS say more about long-term change, and SS small order - short-term trend.
Crossing procedure averages can show what trend - long-term or short-term, changes direction.
2. If the trend is growing, the most sensitive short-SS is higher than the rest of the order, and the most smoothed (long-term) CC is below the other secondary.
In a downtrend - just the opposite.
3. Order of crossing the SS says timeslot changes its trend direction.
The first to cross the more sensitive short-term averages.
After them, in ascending order - more and more long-term.
4. SS with a long period show the long-term trends, not taking into account and smoothing out all the market "noise" and short-term trends, showing the actual trends of the trend.
SS with a smaller period will show the short-term trends, recognize all the current and latest trends, and, accordingly, does not recognize the long-term trends.
We conclude that, as the short-term trends are very chaotic and unpredictable, it is better to focus on the SS with a longer period to determine long-term trends.
This conclusion confirms the long running postulate, which states that in the long run the market is always growing.
The recommendations do not mean that you should not trade in the short term.
It's all relative - the five-minute chart during a long day will be long-term, and at weekly intervals in such a relatively long period will be annual.
Rather, you can finally create Tip period as follows: the longer the period, the more reliable signals generate a combination of moving averages.
Like it or not, understanding that, over time, it becomes absolutely clear to any trader.
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