*Japanese FOREX CHANNEL
Technical analysis in the forex market

Moving average

The moving average method is regarded as the typical model in the technical analysis due to its simple structures, This is widely confident in many market participants and the curve just represents the market trend. The trend analysis cannot predict the market movements in the future unlike the Oscillator analysis. You can make use of the moving average for capturing the current market trend as it follows the forex market later.

The moving average curve of the forex market

 
Chart  The moving average curve of the forex market
 

Most players keep in mind the 21 days moving average. Let's take a look at the relative behavior between the market movement and the 21 days moving average here. In the up trend, it is the signal to sell for the short term that the curve of the price movement crosses 21 days moving average downward. In adverse, it indicates the signal to buy for the short term that the curve of the price movement crosses it upward. Many financial institutes and trust banking corporations in Japan are said to make much of the 21 days moving average, and they are going to take action for hedge when the curve of the 21 days moving average turns flat in the course of up trend.

You can use the combination of two moving averages, 90 days MA and 200 days MA which often suggests the end of the market trend and the reversal point. We call it as the golden cross when the 90 days MA breaks 200 days MA upward and the dead cross when the 90 days MA breaks 200 days MA downward. Based on this theory, you have to find the most suitable moving average to your forex trading. Here, 'MA' is the abbreviation of the Moving Average.

Display of daily chart and Moving average

 

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