The way of heaven is called yin and yang, the way of earth is called softness and hardness, the way of humanity is called benevolence and righteousness, the way of the market is called balance of short and long. Below, we will discuss the 20-day moving average strategy, which even beginners can understand.
1. Judging short-term trends
When the 20-day moving average turns upwards, it indicates an upward trend in the short term; when the 20-day moving average moves down, it proves a downward movement in the short term; if the 20-day moving average moves slowly or approaches the average, it indicates that the short term is entering a small range of oscillation.
When the price of the currency shows a bullish arrangement in the short term, the 20-day moving average is rising, and the K-line is above the 20-day moving average, it supports and strengthens the subsequent trend of the currency price. When the price shows a short-term pullback, it becomes a good buying point.
When the 20-day moving average of the currency price turns down, and the last bullish candle is pushed down by the first bearish candle by more than 50%, causing a significant decline in the market, and the price is below the 20-day moving average, it indicates a selling point in the entire market, which means exiting during a subsequent rebound.
There is another very simple way to judge the market trend in the short term: open the chart and leave only the 5-day moving average and the 20-day moving average. If the 5-day moving average crosses above the 20-day moving average, it indicates a strong short-term trend, and you can consider entering and increasing your position; conversely, if the 5-day moving average is below the 20-day moving average and does not cross upwards, then it is advisable to observe.