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technical_indicators:moving_averages [2019/09/07 00:24] betseyp [Bearish Moving Average Cross] |
technical_indicators:moving_averages [2020/09/11 22:38] betseyp [Support and Resistance] |
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| Do not expect exact support and resistance levels from moving averages, especially longer moving averages. Markets are driven by emotion, which makes them prone to overshoots. Instead of exact levels, moving averages can be used to identify support or resistance **//zones//**. | Do not expect exact support and resistance levels from moving averages, especially longer moving averages. Markets are driven by emotion, which makes them prone to overshoots. Instead of exact levels, moving averages can be used to identify support or resistance **//zones//**. | ||
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| + | ===== Moving Average Ribbons ===== | ||
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| + | Several moving averages with different look-back periods can be plotted on the same chart. The moving average lines resemble a ribbon moving across the chart: | ||
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| + | {{:technical_indicators:moving_averages:ribbonexample.png?800}} | ||
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| + | In addition to analyzing individual moving average lines on the ribbon, chartists can glean information from the ribbon itself. If the lines are running in parallel, this indicates a strong trend. If the ribbon is expanding (the lines are moving further apart over time), this indicates the trend is coming to an end. If the ribbon is contracting (the lines are moving closer together or even crossing), this can indicate the start of a new trend. | ||
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| + | **Learn More:** [[:technical_indicators:ma_ribbon|Moving Average Ribbon]] | ||
| ===== Conclusion ===== | ===== Conclusion ===== | ||