Golden Cross Strategy

In this article we will discuss the "Golden Cross" . These colorful terms refer to the graphical models that most traders use in their trade every day, but may not imply this title. Along with many of their counterparts, they include a section of the technical analysis. Most often, these graphical models are called Perez ware moving averages.

Moving averages are a vital market data, but all of them have one common limitation - they lag behind current events. By the time 20 - Moving Average periodnaya turn up the top, reaffirming the trend, the movement has continued at all and may even be finished. Although more rapid variations (such as exponential moving averages) accelerate the filing of the signals, it is still all of them serve commercial signals too late.

The use of multiple moving averages allows to overcome many disadvantages of a single instance. They are particularly effective when used in combination with image pricing models. For example, take the long and short-term Moving Average. Then watch the price movement when the sliding average to turn to each other and cross. In this case, it may be a good trading signal, especially when it coincides with the key level of support or resistance.

Moving averages show all the usual characteristics of support and resistance. For example, a rolling average will often bounce off another in the first test, but did not break immediately. Then, like the price bars, chances are shifting in the direction of the violation and the crossing of moving averages, the next test. In contrast, when a rolling average could not break through another Moving Average, after several attempts, it gives a strong signal about the possibility of razvorotatrenda.

Different times call for different trading periods for the moving averages. Trading on the oscillations, with periods ranging from one to three days, works well with the use of moving averages, the ratio between the periods which corresponds to 3 - or 4 - fold difference. This enables the convergence / divergence between the different trends work in favor of the trader.

For example, the daily schedule can show a strong upward trend, while the 60-minute schedule begins deep correction. 40-Day Moving Average will continue to point towards a trend for a long time, but 13-Day Moving Average (3x13 = 39) and quickly spread down to specify the direction of possible motion for a longer moving average. The point where they intersect, is the principal level of support.

Intersections noted significant changes in pulse, and levels of support / resistance regardless of the time period. Many traders, respectively, can hold only moving averages and know most of what they need to know. The most popular parametremi for the moving averages are: 20 days for short-term trends, 50 days for medium and 200 days for the big picture.
Long-crossing have more weight than short-term events. "Golden Cross" represents an important change from the Bear Market of bychemu. This happens when the 50-day rolling average breaks above the 200-day moving average. On the contrary, "??????????? Cross regaining power bears, when the 50-day Moving Average is falling back below the 200-day. 200-Day Moving Average is becoming the main drag after the 50-Day Moving Average falling below it, and the main support of a breakthrough after 50-day moving average above it. When the price is "caught in a trap between the 50-day and 200-day Moving averages, it can repeatedly fluctuate in price range, limited by these extrema. These variations represent an excellent opportunity for short-swing trading (trading on the movement).

Using the crossing of moving averages significantly enhances many types of trading strategies. But try to limit their use to the market trend. Since Moving averages submit false signals to the lateral market. Keep in mind that this is the usual indicators to measure directional momentum. They are losing their effectiveness in markets with no or slow changes in the price.

For many years, technical analysts are trying to create a system of filters for the crossing of moving averages through the formula of recognition of trends in order to reduce the number of false signals and rapid turn. You can also try to do so, and can focus on image pricing models, which tell you whether or not the crossing of moving averages before or not.

Markets permanently located in the side bands, limiting validity of any information provided by Moving averages. All Moving averages for the dead markets converge, ultimately, to the same price level. This is the behavior of moving averages, when they converge in one line, provides the key to future tactics. Complete cessation of the use of moving averages, when such a situation and move on to the oscillators (eg Stochastics), to predict further price movement.

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based on www.hardrightedge.com