🫧Many people still do not understand how to read the MA lines, today I will provide a detailed explanation, and after reading this, you will find that understanding 'MA' is so simple ~ 🌀🌀
🏆In trading, moving averages (MA) are commonly used technical analysis tools, short-term (EMA) is more sensitive, long-term (MA) is smoother, different colored MA lines usually represent moving averages of different periods. Here’s a detailed explanation of how to use them:
🌈🌈1. The meaning of the 3 yellow, red, and blue MA lines🌈🌈
Different platforms may have slightly different colors, but typically the default settings are as follows (taking common parameters as an example):
- Yellow MA(5): Short-term moving average (e.g., 5 periods, 5 days), reflects short-term price trends, sensitive but with larger fluctuations.
- Red MA(10): Medium-term moving average (e.g., 10 periods), balances short-term and long-term trends.
- Blue MA(20/30): Long-term moving average (e.g., 20 periods or 30 periods), reflects medium to long-term trends, strong stability but lags.
📈📈2. How to judge trends using MA lines?📈📈
1. Moving average crossover:
- Golden cross: Short-term line (yellow) crosses above long-term line (blue), may indicate an upward trend, suitable for longing.
- Death cross: Short-term line (yellow) crosses below long-term line (blue), may indicate a downtrend, suitable for shorting.
2. Moving average arrangement:
- Bullish arrangement: Short-term > Medium-term > Long-term, trend is upward, suitable for trend-following longs.
- Bearish arrangement: Short-term < Medium-term < Long-term, trend is downward, suitable for trend-following shorts.
3. Price and MA position:
- Price is above MA, MA may act as support;
- Price is below MA, MA may act as resistance.
⏰⏰3. Period view selection (1 minute vs 15 minutes)⏰⏰
1. 1-minute view:
- Applicable scenarios: Ultra-short-term trading (e.g., high-frequency contracts), capturing minute-level fluctuations.
- Disadvantages: Lots of noise, frequent false signals, requires quick response and high risk tolerance.
2. 15-minute view:
- Applicable scenarios: Short-term trading (e.g., intraday trading), clearer trend, suitable for ordinary contract traders.
- Disadvantages: Lagging more than the 1-minute line, but more reliable.
3. Other commonly used periods:
- 4-hour/daily: Determine medium to long-term trends, suitable for spot or long-term holdings.
- No most accurate period: Need to combine with trading strategies (e.g., use 15 minutes for short-term, daily for long-term).
⏳⏳4. Practical application of MA lines in contract trading⏳⏳
1. Longing signal:
- Short-term MA crosses above long-term MA (golden cross), and price stabilizes above the moving average.
- Moving averages are in a bullish arrangement, retracing to near MA without breaking (support level).
2. Shorting signal:
- Short-term MA crosses below long-term MA (death cross), and price is suppressed below the moving average.
- Moving averages are in a bearish arrangement, bounce back to near MA is blocked (resistance level).
3. Notes:
- Combine with other indicators: such as trading volume (a breakout with increased volume is more reliable), MACD, RSI, etc.
- Stop-loss settings: MA serves as a reference, strict stop-loss needed (e.g., if it breaks key MA, then stop-loss).
- Trend confirmation: Prioritize larger time frames (like 1 hour), use smaller time frames (15 minutes) to find entry points.
✅✅5. Summary✅✅
- The core role of MA lines: Smooth price fluctuations, assist in judging trend direction and support/resistance.
- Contract trading suggestions:
- Short-term: Focus on the 15-minute view, use the 1-minute view to assist entry.
- Combine with larger time frames (like 4 hours) to confirm trend direction, avoid counter-trend operations.
- When the moving average crossover + price position + trading volume resonate together, the signal is more reliable.
💲Mnemonic:
Short crosses long, must rise; (Golden cross)
Long crosses short, must dive. (Death cross)
🧸🧸Go with the trend, don't swim against the current!
🏆🏆Wishing everyone abundant wealth! Learn it and go try it out ~
Note: Lagging indicators may occasionally fail during sharp market fluctuations, please ensure to combine with other indicators and set stop-loss and position management!