Moving Average Crossover Trading

Moving Average Crossover Trading

We now know by plotting moving average on a chart can help us determine if trends are going up or down.

We have determined how at some instance, certain events can cause a sudden surge on price action so you will have to be leery about “fake outs”.

And to avoid this, traders need to plot more than one moving averages on a chart. If the moving averages cross over one another, this signals that the trend is changing.

In basketball, crossover is a very important move, and the same is true in forex trading. A chart plotted well with moving averages showing crossover provide you a better entry – a chance for you to gain more pips.

Here’s another look at the daily chart for UD/JPY to explain crossover trading.

Crossover Trading

moving average crossover

From April to June, the trend is going up and peaks in July at around 124.00. Then it shows to go down. In the middle of July, we are seeing 10 SMA crossed below the 20 SMA. Right after that is a straight downtrend.

If you made the right decisions and analysis at the crossover of the moving averages then you just won yourself almost a thousand pips!

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