The author tells us how Moving Averages can be used to identify trends, identify and support resistance levels, measure price momentum and identify price breakouts. He says that normally a longer term map of a trend gives more reliable information. Identifying trend markets, when two moving averages diverge from one another is one of the many ways Moving Averages can be useful to the trader. A weighted moving average, which puts more weight on recent data and less weight on older data is but another tool in identifying price movements in the markets.
Mr. Ghafari explains that the Simple Moving average is a lagging indicator, while the Exponential Moving Average reduces lag by emphasising current data. He says, "A 21 day Simple Moving Average can smooth the real price fluctuations and give us a better insight to price evaluation." Using illustrative charts, this document explains how Moving Average indicators can be a benefit in your trade strategy ... download the eBook to read more
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