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AbsoluteZero
Registered: Oct 2012
Posts: 1 |
10-01-12 08:53 PM
I'm very new to trading, and have a simple question.
Does an indicator's SMA provide any support or resistance for the indicator, and in effect, the price?
Thank you.
If i am posting this in the wrong place I apologize.
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Lucrum
Registered: Dec 2003
Posts: 31326 |
10-02-12 12:44 AM
Quote from AbsoluteZero:
Does an indicator's SMA provide any support or resistance for the indicator, and in effect, the price?
People who use MA's swear they do.
Many years ago, before computer charting software, the community probably paid as much attention to daily price charts as anything else.
On a daily chart a 20 period (day) MA represents the average price for one month of trading. I could see some relevance here, maybe.
50 and 200 period MA's on DAILY charts have a fairly wide following. In and of themselves I can't think of anything particularly magical about either BUT they along with the 20 MA seem to have a self fulfilling prophecy of sorts going for them because of wide following. ON THE DAILY charts. Apply the same period MA's to ANY other time frame and IMO the MA represents nothing but a MA of price. NOT support or resistance. Any price action that implies otherwise is almost certainly coincidence.
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Rationalize
Registered: Jan 2010
Posts: 774 |
10-02-12 01:20 AM
Quote from AbsoluteZero:
I'm very new to trading, and have a simple question.
Does an indicator's SMA provide any support or resistance for the indicator, and in effect, the price?
Thank you.
If i am posting this in the wrong place I apologize.
AbsoluteZero - Absolutely zero.
Run a backtest, or just play with some yahoo finance data in excel.
Not rocket science, but a good little iq test.
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WD40
Registered: Dec 2005
Posts: 418 |
10-02-12 03:22 AM
Quote from AbsoluteZero:
I'm very new to trading, and have a simple question.
Does an indicator's SMA provide any support or resistance for the indicator, and in effect, the price?
Thank you.
If i am posting this in the wrong place I apologize.
if life is so naively simple, eveybody would all be a millionaire in his first year of trading.
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WD40
Registered: Dec 2005
Posts: 418 |
10-02-12 03:26 AM
Quote from AbsoluteZero:
I'm very new to trading, and have a simple question.
Does an indicator's SMA provide any support or resistance for the indicator, and in effect, the price?
Thank you.
If i am posting this in the wrong place I apologize.
Does an indicator's SMA provide any support or resistance for the indicator, and in effect, the price?
sure it does
just think, if the current price is trading above the average of previous 5 days' price, don't you think it means something? I would think the price is trending up. ie. the 5 SMA can be looked at as a support. If it is not a support, the price would have traded below it, wouldn't you think? If the price cannot trade below 5 SMA, then the 5 SMA must be the support.
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intradaybill
Registered: Feb 2008
Posts: 2962 |
10-02-12 05:14 PM
Quote from AbsoluteZero:
Does an indicator's SMA provide any support or resistance for the indicator, and in effect, the price?
It may or it may not. It depends on many other factors. This is easy to backtest on broker platforms.
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