Three MA

Three MA

There is no magic in moving averages but they can be used to form the basis of a simple trading strategy that works.  You can develop many strategies using moving averages but remember that complex trading strategies are not always best.

Both day traders and swing traders can benefit from a moving average.

55 Period EMA

The 55-period long-term moving average will be considered the longer-term trend direction indicator:

When the 55 EMA is below both the 9 and 21, we will consider the trend to be up

When the indicator is above both of the shorter-term moving averages, we will consider the longer-term trend to be down

21 Period EMA

The 21-period exponential moving average is considered a medium-term trend indicator:

We want to see the 21 below the 9 and above the 55 for an uptrend

The 21 should be above the 9 and below the 55 for a downtrend

9 Period EMA

The 9-period short-term moving average will be seen crossing over and under the 21 period more times than crossing the 55:

The 9 EMA crossing over the 21 while already above the 55, is an uptrend and looking for a buy trade

If it crosses below the 21 EMA while already below the 55 EMA, that is a downtrend and looking for a sell trade