# Forex 100 moving average strategy

The same can be said about price and moving averages. When the price has more momentum speed , it is able to travel more distance away from moving averages before being pulled back due to the moving averages and gravity kicks in. When the price has a little momentum, it is unable to go far before the gravity of the moving averages pulls it back to its average. The angle of 2 faster-paced moving averages and the difference between them will indicate whether the price has sufficient speed to break away from its average.

The best moving averages for momentum readings are ones between 5 and maximum 40 ema. A trader could choose 5 and 10 emas for instance, or 10 and 20 ema or 20 and 40 ema closes. Our SMI momentum indicator would do the same of course, but with less effort on your side.

The hidden secret 2 part discusses the speed part of the equation. This section focuses on the gravity part. How does a Forex trader know whether gravity is in play and how strong it is?

In this case, intermediate moving averages are in fact the best for representation of gravity. The moving averages, in fact, turn into dynamic support and resistance and when the price does get back to them, it can use these levels as a rough area for trend continuation bouncing area due to Support and Resistance. Irrespective of that, what do you think of the above concepts and what are your experiences in trading?

We at Winners Edge Trading we want to provide the best content for your Forex trading and appreciate any and all feedback. By the way, next time we will continue with our moving average discussion and explain how we can use the indicators on multiple frame analysis!

For reversal traders this could take profit place, for trend traders this translates into how long the filter is valid The hidden secret is that on average — when divergence appears — a trader can expect the price to retrace at minimum back to an intermediate moving average anywhere between and ema. The answer is simple: Please share your comments on additional ways to use moving averages that we did not mention.

The following two tabs change content below. Winners Edge Trading was founded in and is working to create the most current and useful Forex information and training available on the internet. Latest posts by admin see all. As price builds on a trend with either higher highs and lows OR lower lows and highs, the trend eventually reaches an exhaustion due to the momentum fading away with each subsequent newer higher or low. Read more here about divergence definition, divergence example, and its uses.

The interesting point is: For reversal traders this could take profit place, for trend traders this translates into how long the filter is valid. The hidden secret is that on average — when divergence appears — a trader can expect the price to retrace at minimum back to an intermediate moving average anywhere between and ema.

But only if price hits or comes close to these moving averages can a trader consider the divergence to be irrelevant for future price movements. Not everyone is a big fan of physics, and I am one of them as its tough material. Price and moving averages have a similar relationship to each other as humans with earth. Here is my modest explanation of physics: When we lose speed, the gravity pulls us back to the Earth.

The more speed we have, the further and higher can jump. The great basketball legend Michael Jordan is the best example. The same can be said about price and moving averages. When the price has more momentum speed , it is able to travel more distance away from moving averages before being pulled back due to the moving averages and gravity kicks in.

When the price has a little momentum, it is unable to go far before the gravity of the moving averages pulls it back to its average. The angle of 2 faster-paced moving averages and the difference between them will indicate whether the price has sufficient speed to break away from its average. The best moving averages for momentum readings are ones between 5 and maximum 40 ema. A trader could choose 5 and 10 emas for instance, or 10 and 20 ema or 20 and 40 ema closes.

Our SMI momentum indicator would do the same of course, but with less effort on your side. The hidden secret 2 part discusses the speed part of the equation. This section focuses on the gravity part.