Crossover Strategy:
A bullish signal occurs when a shorter moving average (e.g., 10-day) crosses above a longer one (e.g., 50-day).
A bearish signal occurs when a shorter moving average crosses below a longer one.
Support and Resistance:
Moving averages often act as dynamic support or resistance levels.
4. Time Frames Matter:
Short-term MAs (e.g., 10 or 20 days) react quickly but may give false signals.
Long-term MAs (e.g., 50 or 200 days) are more reliable but slower to react.
5. Limitations:
Lagging Indicator: Moving averages follow the price and may not predict sudden reversals.
False Signals: Especially in ranging markets.
Pro Tip: Combine moving averages with other indicators like RSI or MACD for better accuracy