The Moving Average
A personal story...
If ever I am asked, What Is A Moving Average, I say that the Moving Average is probably, if I was pushed, the only indicator I would have on my chart.
In fact, when looking at long term charts the only indicator on my Daily chart is the 200 MA and on my Weekly chart, the 50 MA. Why? Because they both represent, roughly, the average closing price of the last year. To me and to many others this is a useful barometer of the long term trend. I can see if price is above/below the long term trend and if that long term trend is rising/falling/flat. I can see if a long term trend is potentially starting/ending, I can see if price is over extended (over bought/over sold, without the need for an oscillator) or if price is retracing (to the MA, a potential area of support/resistance).
All very useful information from a quick glance at one indicator!
One of my core Forex Trading strategies, the 3 Little Pigs MTF Trading Strategy is based on 3 time frames and a representative MA on each of those time frames. It looks to trade with the Long, Medium and Short term trends based on the Weekly, Daily and 4 Hour time frames.
Here's a bumper article written by us on how Moving Averages can used to identify Trend Reversals.
Former winner of the Babypips FREE Trading Strategy Of The Month, the FREE eBook is available to all members who sign up here.