Ways to use moving averages
1. Trend identification
If the price is above the moving average → the market is in an uptrend (buy signal).
If the price is below the moving average → the market is in a downtrend (sell signal).
If a short-term moving average (e.g. 10 EMA) is above a long-term moving average (e.g. 50 SMA) → the market is bullish.
2. Crossover Signals
Golden Cross: When the short-term moving average (50 SMA) crosses above the long-term moving average (200 SMA) → buy signal.
Death Cross: When the short-term moving average crosses below the long-term moving average → sell signal.
3. Dynamic Support & Resistance
A moving average can act as both support and resistance.
Example: The 200 EMA usually acts as a strong support or resistance.
4. Filtering with other indicators
For better signals, use moving averages with indicators like RSI or MACD.
Example: If the 50 EMA is showing an uptrend and the RSI is also above 50 → a strong buy signal.