FxSaint

Technical Analysis for beginners - Part 2

FX:EURUSD   Euro Fx/U.S. Dollar
In continuation of my earlier blog on Technical Analysis For Beginners (link attached below), today I want to pen down important detail on indicator, specially MOVING AVERAGE's (MA's) . Many many traders use different type of moving average in their trading strategy which makes it more important indicator compared to other indicators. Many people ask or doubt whether or not indicators work ? & specially moving averages ? Answer to that question is sometimes it works & sometimes it wont work. Now its upto trader to find out when it will work & when it will not. One way of finding that is by trail & error. I never use same MA's on my every screen on every pair. I run different setups with different numbers in MA to fit the price. MA should be dynamically fitted into price, when that happens we can establish whether here it will work or not ? (please refer the picture attached for clear understanding).
snapshot
From the picture above you can see how I have managed to fit the MA in proximity of price in such as way that it provides support & resistance to price dynamically. Dont bother which MA or what period is used, because the truth is next time it wont fit in as clearly as it does now. The important thing here is trail & error, the only way to find the dynamically fitting MA.
So secret technique I use is, I start with 25 period SMA & then 30 period SMA then 50 period SMA then 50 period EMA then 100 period SMA on low in uptrend & high on downtrend, so on so forth with different numbers till I feel it dynamically supports or resists price from moving. So next time, be the little researcher yourself when you think of making use of MA & dont settle for famous 100/200 period SMA or EMA. Instead try to experiment & play with different period & different kind of MA & see how it fits into price of different pairs. Hope this information will help you & thank you for taking time to read this long.
Happy trading.
Cheers!

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