MOVING AVERAGE CROSSOVERS

Crossovers provide several uses in interpreting price action. We can see in the chart
for the GBPUSD 30 minutes that the crossovers were of limited value in
sideways patterns, but did provide buy zones when the crossover turned up. Also note that the moving average acted as a firm support later on. Notice that the moving averages
look ready to cross over again, pointing down. If the candle probes below these moving
averages, traders looking to sell will have strong confirmation.
Which crossover periods should be used? In the previous example, the 21 versus
8 simple moving averages was used. But the selection of the moving averages is quite
arbitrary unless they are back-tested. The experience of the trader is the most important
variable to use.




By ABE COFNAS