The so-called moving average in foreign exchange technical indicators refers to the arithmetic average within a certain trading period (day, week, month, year) . Take the 5-day moving average as an example, add the closing prices within 5 days day by day. Then divide by 5 to get the 5-day average value. After connecting these average values on the drawing, the line drawn is called the 5-day moving average. The same goes for other moving averages.
Types of moving averages
1. Classification of short, medium and long-term moving averages:
People often call the 5-day and 10-day moving averages short-term moving averages. Short-term moving averages are more sensitive to price or index fluctuations than long-term moving averages, and they fluctuate faster. In short-term operations or in weakness, people often use the 10-day moving average as the basis for short-term trading.
People often refer to the 20th (monthly line), 30th, and 60th (seasonal line) moving averages as medium-term moving averages. Among them, the 30-day moving average is used the most frequently, and it is often called the lifeline of the market . When it is strong, it is often the stock price falling below the 30-day moving average or the downward bending of the 30-day moving average as the stock's final stop loss. It is also often used as the dividing line between the bull and the bear by bending upward or downward on the 60th day!
People often call the 120-day (half-year line) and 250-day (annual line) moving averages as long-term moving averages .
The combination and response of moving averages
Currently, there are the following types of moving average combinations commonly used in the market: short-term moving average combinations are 5, 10, 20, 5, 10, and 30 days; mid-term moving average combinations are 10, 30, 60 days, 20, 40, and 60 days Two groups; long-term moving average combination is 30, 60, 120 days, 60, 120, 250 days two groups.
A. Short-term moving average combination . The most commonly used combinations are 5, 10, 20 and 5, 10, and 30 days. The short-term moving average combination is mainly used to observe the short-term trend of stock prices, for example, what changes will happen to the stock price trend in one to three months. Generally speaking, in a typical ascending channel, the 5-day moving average should be the center of multi-party protection, otherwise the upward strength is limited; the 10-day moving average is an important support line for the bulls, and the 10-day moving average is effectively broken, and the market may be possible Weakened. In a weak market, when sentiment is low, the resistance level for a weak rebound should be the 10-day moving average; the 20 and 30-day moving averages are an important indicator of the short-term and mid-term trend of the market. When the 20- and 30-day moving averages tilt upward, they can be bullish in the short term. Do more. When the 20 and 30-day moving averages are sloping downward, short-term bearish and short-term positions are required.
B. Mid-term moving average combination . The most commonly used combinations are 10, 30, 60 days and 20, 40, and 60 days. The mid-term moving average combination is mainly used to observe the mid-term operating trend of the market or individual stocks, for example, what changes will happen to the market or individual stocks in 3-6 months. Generally speaking, the mid-term moving averages are arranged in a long position, indicating that the mid-term trend of the market or individual stocks is good. At this time, investors should be long and long in the medium term; on the contrary, the mid-term moving averages are arranged in a short position, indicating that the mid-term trend of the market or individual stocks is weak. At this time, investors should be short and short in the medium term. From a practical perspective: using mid-term moving average analysis to study the trend of the market or individual stocks is more accurate and reliable than short-term moving average combinations.
For example, when the market bottoms out, if you are unsure about the rebound or the reversal, the mid-term moving average combination will help you a lot. When the 30-day moving average crosses the 60-day moving average, a decent mid-level market will appear. When the mid-term moving average combination diverges upwards, it often indicates the coming of the big market; on the contrary, when the 30-day moving average crosses the 60-day moving average, There will be a big down market. When the mid-term moving average combination is glued down and diverges, it often indicates the coming of a big down market. It can be seen that it is very important for investors to understand and understand the use and skills of the medium-term moving average combination.
C. Long-term moving average combination. The most common combinations are 30, 60, 120 days and 60, 120, 250 days. The long-term moving average portfolio is mainly used to observe the mid-to-long-term trend of the market or individual stocks, for example, what will happen to the trend of the stock price for more than half a year. Generally speaking, when the moving average in the long-term moving average combination forms a golden cross and becomes a long-term arrangement, it indicates that the market is optimistic about the long-term trend of the market or individual stocks. At this time, investors should maintain long-term short-term thinking, and encounter intraday shocks or Callback requires the courage to absorb on dips; on the contrary, when the moving averages in the long-term moving average combination form a dead cross and become a short-term arrangement, it means that the market is bearish on the long-term trend of the market or individual stocks. At this time, investors should maintain the long-short-short-long thinking. In the event of intraday volatility or rebound, it is necessary to stick to rallies and lose pounds.