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Moving Average/Support/Resistance Example
Here's a great example on how you can use a moving average to watch for trend reversals and to trigger trades in case you don't like drawing a lot of lines on your chart.
In this example, when the 50 Moving Average (MA) crossed the 200MA in May 2019, it signaled a bearish reversal (known as a bearish cross). Later, in November 2020, it crossed again signaling a bullish cross and an uptrend. If you had shorted the stock, you would've gotten around 60% gain.
Now, if I was in this trade right now, it's near a recent high and just poked over a global (weekly chart) resistance line, so if it fails to stay on top of that, instead of turning into support for a continued uptrend, it may stay as a resistance level and begin a downtrend. Watch for consolidation at it's current level and be ready to change your strategy.
In this example, when the 50 Moving Average (MA) crossed the 200MA in May 2019, it signaled a bearish reversal (known as a bearish cross). Later, in November 2020, it crossed again signaling a bullish cross and an uptrend. If you had shorted the stock, you would've gotten around 60% gain.
Now, if I was in this trade right now, it's near a recent high and just poked over a global (weekly chart) resistance line, so if it fails to stay on top of that, instead of turning into support for a continued uptrend, it may stay as a resistance level and begin a downtrend. Watch for consolidation at it's current level and be ready to change your strategy.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.