Strong three-line integration
[Technical form]
When the 5-day, 10-day and 20-day moving averages cross and turn upward, it is an important short-term buying point; when the three moving averages cross at the same time and turn downward, it is an important short-term selling point.
[Technical meaning]
The 5-day moving average, 10-day moving average and 20-day moving average represent the majority of the loss-making groups in the market, and also represent the general cost in the market. When the three lines intersect, it means that the average cost in the last 5 trading days, 10 trading days and 20 trading days has reached unity, and the subsequent rise or fall must be the common "emotional catharsis" of the three different trading cycles. The overall rise or fall will cause relatively fast currency price movement in the short term.
[Application skills]
When the 5-day, 10-day and 20-day moving averages intersect, a resonance point is formed. The upward or downward change of this resonance point is called the best buying or selling point for the short term.
The flattening of the moving average represents an important direction choice that is about to occur. When the moving average changes from its original direction of movement to flattening, the market will choose to move upward or downward again after a period of shock consolidation. It is a key point in the application of the moving average to judge its direction relatively effectively in advance.
(1) Downward movement: The range of shock and consolidation is at a relatively high level or in the shock and rebound period during the downward process; the volume during the shock and consolidation period is abnormally large, especially the volume pattern of rising volume shrinking and falling volume increasing; the shock and consolidation shows obvious bearish patterns such as M head, head and shoulders top, triple top, etc.
(2) Upward movement: The consolidation period is at a relatively low level or in the process of rising; the volume performance in the consolidation period is normal, especially when there is a volume pattern of rising volume and falling volume; the consolidation period shows obvious bullish patterns such as W bottom, head and shoulders bottom, and arc bottom.
Notice
During use, special attention should be paid to the 20-day moving average and the 10-day moving average flattening out and turning upward, at least reaching the level of flattening out.
The flattening of the moving average represents an important direction choice that is about to appear. The volume performance of the moving average in the consolidation range and the final flattening must be that the rising volume increases and the falling volume decreases; at the same time, the decline in the price of the currency cannot effectively break through the important medium- and long-term moving averages below or the lower track of the sideways range.
The two necessary conditions are that the moving averages converge at one point and turn at the same time. Neither is indispensable. If only one condition is met, the actual effectiveness of this tactic cannot be guaranteed.