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DOW JONES     simple trading lesson .Trading Opportunities Using Moving Averages (Christina)

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Christina     posted : 24/11/13   11:03 am


member  
Let's begin with the most commonly-used moving averages among market technicians: the 50- and 200-day simple moving averages. These two trend lines often serve as areas of resistance or support.

For example, the chart below shows the circled areas where the 200-period SMA provided resistance in an April-to-May, 2008 upward move in the DJIA (top circle on the heavy black line), and the 50-period SMA provided support (lower circle on the blue line).





click to enlarge




I\'m happy to receive any constructive criticism about my trades. I\'m always ready to learn more.
Christina     posted : 24/11/13   11:04 am


member  
Let's look at another widely used simple moving average which works equally well in commodities, currencies, and stocks: the 13-period SMA.

In the sugar chart below, prices crossed the line (marked by the short, red vertical line), and that cross led to a substantial rally. This chart also shows a whipsaw in the market, which is circled.





click to enlarge


I\'m happy to receive any constructive criticism about my trades. I\'m always ready to learn more.
Christina     posted : 24/11/13   11:05 am


member  
Another popular moving average setting that many people work with is the 13- and the 26-period moving averages in tandem.




click to enlarge



The chart of Johnson and Johnson shows a crossover system using a 13-week and a 26-week simple moving average of the close. Obviously, the number 26 is two times 13. During this four-year period, the range in this stock was a little over $20.00, which is not much price appreciation. This dual moving average system worked well in a relatively bad market by identifying a number of buyside and sellside trading opportunities
I\'m happy to receive any constructive criticism about my trades. I\'m always ready to learn more.
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