You may ask yourself why use a long term moving average for a short term strategy?
The answer to that is quite straight forward....
It's better to have a complete idea of what the market is doing opposed to half an idea, right?
This final moving average is the 320 in purple. It's the 4 hour 20 ema on the 15 minute chart.
It is of course the slowest to react and has a whole lot of lag. However, it is the final piece to our puzzle and help with targeting as well as other things.
See that the blue medium term moving average is always above the purple long term, meaning that the long term trend is up. There will be many red/blue and green/red crossovers within the blue/purple trend but it's always worth bearing in mind what the big picture tells you.
On Jan 30th there was a red/blue cross telling us to sell Yen at around 13:30. This contradicted what the med-term / long-term told us. However, the long term average was a very good indication of where the price could have gone and indeed it did. It hit the 320 at around 18:00, formed another low at roughly the same point early on the 31st, then bounce back up.
If using just the red and blue how many of you would have sold Yen through the purple ema?
No comments:
Post a Comment