Technical Analysis of Moving Average Indicator

Forex Trading Trend Identification

The forex moving average indicator can be used as an technical indicator for generating forex signals. A buy or sell Forex signal is generated when price either moves above or below moving average, respectively.

If the MA is heading upward in diagonal manner then general forex market trend is upward.

If the on the other hand the MA is heading downwards in diagonal manner then general forex market trend is downwards.

Upward Forex Trend/Bullish Trend

If the MA is moving up, then the trend is upwards and the signal generated is a buy/bullish forex signal.

As long as the forex price is above the moving average then the Forex trend will remain as an upwards trend. The moving average will act as a 'support level' and price action of the forex chart candlesticks should not close below the MA.

Buy Signal

When the forex price moves above the MA and closes above the moving average, a buy signal is generated.

Forex Traders, who want to confirm the forex trade signal before implementing it, should wait until the MA line turns and starts to move in an upward forex trend direction. It is always best to wait for the confirmation forex signal so as to reduce chances of a whipsaw.

Upwards Forex Trend - How to Day Trade Forex: A Detailed Guide to Day Trading Strategies

Downwards Forex Trend/Bearish Market

If the MA is moving down, then the Forex trend is downwards and the signal generated is a sell/short forex signal.

As long as the forex price is below the MA then the forex trend will remain as a downward bearish Forex trend. The MA will act as a "resistance level" and price action of candlesticks should not close above the MA.

Sell Signal

When the forex price moves below the MA and closes below the moving average, a sell signal is generated.

Forex traders who want to confirm the forex signal should wait until the MA line turns and starts to move in a downward direction. This will reduce the chance of trading a whipsaw.

Downwards Forex Trend - How to Day Trade Forex: A Detailed Guide to Day Trading Strategies

Forex Range Market signals

Range Forex Market signals can also be identified using the Moving Average Indicator.

Moving Average Crossover Method Trading Strategy

The moving average crossover method is also another forex signal generation strategy that is more favored by traders compared to the above forex signal generation strategy method. Moving average crossover trading strategy is also the simplest form of a trading system widely used by online forex traders. This MA crossover method is combined with other technical indicators to form more complex systems & trading strategies.