Technical dry goods: Lecture 21 - The influence of moving average on price (2)
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Reading time: 2 minutes
The moving average system configuration I recommend is MA5, MA10, MA30, MA60, MA120, MA250.
The content of the previous section shared with you the role of moving average in boosting and depreciating.
Recently, I also demonstrated the bottom-picking effect of moving average through BTC practice.
Friends who follow Tang Ge should have noticed that
the recent bottom-picking points are as accurate as cheating. This is not because I am so awesome.
It is because I found the moving average representing the period in the correct period.
I will not elaborate on the preface. You can look back at my tweets from the 17th to the 19th.
Continue the content of the previous issue to talk about the key points:
3. Identify trends or tendencies: Whether the price is rising, falling or sideways, the moving average system can relatively timely and accurately reflect the current trend or tendency, and provide corresponding support or suppression to test the true intention of price movement. Everyone can also get important trading references from the moving average prompts.
Because the moving averages at different positions represent the average cost of the market during that period, the fluctuation of the average cost affects the center of gravity of the price. The direction of the moving average represents the direction of movement of the center of gravity of the price. When the center of gravity moves up, the price falls back to the moving average to support it, and when the center of gravity moves down, the moving average has a suppressive effect.
*Price center of gravity, this is a relatively important technical concept. It is very helpful to explain it clearly here for understanding the following content.
The center of gravity of the price is to draw a straight line with the relative center position of the fluctuation of the currency price (or the average price position between the two high and low points of the trend). The center of gravity of the currency price is not static, but changes with the direction of the price.
After the center of gravity of the currency price is formed, during the operation, when the currency price deviates too far from the center of gravity line, it generally moves closer to the center of gravity line. When it touches the center of gravity line and does not continue to rise (fall), but falls (rises) again, it means that the direction of the current running center of gravity may change.
4. Relative stability: The moving average is more stable than other technical indicators in judging market trends and trend changes. In a well-configured moving average system, moving averages of different time periods play different indicative roles, which is conducive to analyzing various changes in the market.
The moving average system configuration I recommend is MA5, MA10, MA30, MA60, MA120, and MA250.
(1) MA5 is the most sensitive to changes in the price of the currency, and is mainly used for short-term price changes. It has a relatively small role in judging trend changes.
(2) MA30 has the characteristics of both sensitivity and stability. On the one hand, it can make up for the overreaction of MA5, and on the other hand, it can be used to judge the trend and strength of the currency price.
(3) Other moving averages also have their own meanings. I will explain their applications one by one in the following content.
The 6 moving averages of this moving average system each play a different role. While timely and effectively reflecting the changes in the strength of the currency price, their stability can prevent traders from being in a state of anxiety all the time, and enable them to view and analyze the development and changes of the market more calmly and rationally.
