My three favourite Moving Averages on any chart

I have three Moving Averages that I plot on any market.

7 MA
21 MA
200 MA
Here is the JSE ALSI 40 with the three moving averages.

In the above daily chart of the JSE you can see I’ve plotted the 7MA (Red), 21MA (Blue) and 200MA (Black).

Now I have two simple rules for when the market is in an uptrend or a downtrend.

Downtrend with the three Moving Averages

You know the market is in a downtrend when the price is below the 200 MA.

Also, 200MA is above the 21 Moving Average.

And the 21 MA is above the 7MA.

In other words.

7MA < 21MA < 200MA.

You can see on the left part of the chart where the trend is down (Red arrow).

This tells me that the momentum is bearish and the market is more likely to fall than rise.

I will then avoid buying the market and instead will only look to short (sell) and profit from a falling market.

Then we have the

Uptrend with the three Moving Averages

What tells me the market is in an uptrend is when the price is above the 200 MA.

Also the 7MA is above the 21MA.
And the 21MA is above the 200MA.

You can see on the right part of the chart where the trend turns up (Green arrow).

This tells me that the momentum is bullish and the market is more likely to continue to rise.

I will then only look for longs (buy) the market and avoid shorting or selling the market.

Now you have my favourite 3 Moving Averages in a bag for you to plot on your chart and master the trends.

Trade well, live free.
Timon
MATI Trader

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