The Magical 50 days Exponential Moving Average (50EMA)
Updated
In 2021, we should take the price reaction to 50EMA very seriously! Especially if you like to buy the dips!
I believe it could be single best tool to help you find the best entry and exit point in many tickers..!
Let's review few examples:
1-
NVDA
2-
MSFT
3-
AAPL
4-
GOOG
5-
FB
6-
CRM
7-
CSCO
8-
SNOW
9-
BAC
10-
XOM
and major indexes:
SPX
NDX
DJI
What is Price Action?
Price action is the movement of a security's price plotted over time. Price action forms the basis for all technical analysis of a stock, commodity, or other asset charts. Many short-term traders rely exclusively on price action and the formations and trends extrapolated from it to make trading decisions. Technical analysis as a practice is a derivative of price action since it uses past prices in calculations that can then be used to inform trading decisions.
Price action generally refers to the up and down movement of a security's price when it is plotted over time.
Different looks can be applied to a chart to make trends in price action more obvious for traders.
Technical analysis formations and chart patterns are derived from price action. Technical analysis tools like moving averages are calculated from price action and projected into the future to inform trades.
How to Use Price Action
Price action is not generally seen as a trading tool like an indicator, but rather the data source off which all the tools are built. Swing traders and trend traders tend to work most closely with price action, eschewing any fundamental analysis in favor of focusing solely on support and resistance levels to predict breakouts and consolidation. Even these traders must pay some attention to additional factors beyond the current price, as the volume of trading and the time periods being used to establish levels all have an impact on the likelihood of their interpretations being accurate.
Limitations of Price Action
Interpreting price action is very subjective. It's common for two traders to arrive at different conclusions when analyzing the same price action. One trader may see a bearish downtrend and another might believe that the price action shows a potential near-term turnaround. Of course, the time period being used also has a huge influence on what traders see as a stock can have many intraday downtrends while maintaining a month-over-month uptrend. The important thing to remember is that trading predictions made using price action on any time scale are speculative. The more tools you can apply to your trading prediction to confirm it, the better. In the end, however, the past price action of a security is no guarantee of future price action. High probability trades are still speculative trades, which means traders take on the risks to get access to the potential rewards.
Conclusion:
Monitor asset reaction to 50EMA and define your entry and exit strategy based on this simple tool!
Reference Article::
https://www.investopedia.com/terms/p/price-action.asp
I believe it could be single best tool to help you find the best entry and exit point in many tickers..!
Let's review few examples:
1-
NVDA2-
MSFT3-
AAPL4-
GOOG5-
FB6-
CRM7-
CSCO8-
SNOW9-
BAC10-
XOMand major indexes:
SPXNDXDJIWhat is Price Action?
Price action is the movement of a security's price plotted over time. Price action forms the basis for all technical analysis of a stock, commodity, or other asset charts. Many short-term traders rely exclusively on price action and the formations and trends extrapolated from it to make trading decisions. Technical analysis as a practice is a derivative of price action since it uses past prices in calculations that can then be used to inform trading decisions.
Price action generally refers to the up and down movement of a security's price when it is plotted over time.
Different looks can be applied to a chart to make trends in price action more obvious for traders.
Technical analysis formations and chart patterns are derived from price action. Technical analysis tools like moving averages are calculated from price action and projected into the future to inform trades.
How to Use Price Action
Price action is not generally seen as a trading tool like an indicator, but rather the data source off which all the tools are built. Swing traders and trend traders tend to work most closely with price action, eschewing any fundamental analysis in favor of focusing solely on support and resistance levels to predict breakouts and consolidation. Even these traders must pay some attention to additional factors beyond the current price, as the volume of trading and the time periods being used to establish levels all have an impact on the likelihood of their interpretations being accurate.
Limitations of Price Action
Interpreting price action is very subjective. It's common for two traders to arrive at different conclusions when analyzing the same price action. One trader may see a bearish downtrend and another might believe that the price action shows a potential near-term turnaround. Of course, the time period being used also has a huge influence on what traders see as a stock can have many intraday downtrends while maintaining a month-over-month uptrend. The important thing to remember is that trading predictions made using price action on any time scale are speculative. The more tools you can apply to your trading prediction to confirm it, the better. In the end, however, the past price action of a security is no guarantee of future price action. High probability trades are still speculative trades, which means traders take on the risks to get access to the potential rewards.
Conclusion:
Monitor asset reaction to 50EMA and define your entry and exit strategy based on this simple tool!
Reference Article::
https://www.investopedia.com/terms/p/price-action.asp
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