In my system language, CL.1 is yesterday's close. OP.2 is the Open 2 days ago. Thus, in the first instance, CL.1 is required to be 10% (*1.10) above OP.2, in order for a trade to be opened the next morning. My point in posting this was to provide just an example of trading rules which do not require an MA or other indicator. I always suggest to new traders that before getting involved in indicators, they first look directly at price action. Where is price in comparison to where it was just recently? And try starting with daily bars. There are many fine intraday systems that can be created just looking at price levels on daily bars. IMO, everything in trading should be focused on simplicity and clarity. Good luck.
they also say the dog is man's best friend. that does not mean I will plan my trades according to my dog.
Momentum is the only anomaly in the market that persists after its public discovery. Trends are basically a type of price momentum. That's why moving average, despite their lag, can have predictive power.
Not predictive, it's just indicating previous momentum. The MA is not predicting anything, it lags and confirms what's been. If MA could predict, then it would at the top or bottom, but it never does till after the fact. MA's are like the media, has a story that's made up on why the market is doing 'so & so', but it's fiction and twisted to suit the narative. Called hindsight analysis.
Hey All, I'm new here, interesting discussion so far. I'm also still very new to technical analysis, so sorry if this is too beginner of a question, but I'm wondering how looking at different timeframes (1m, 5m, 15m, 1h) affects the way one interprets moving average?
Clearly, time series on different timeframes are constructed of successive price values separated by a different "step" (specified in the timeframe's name -1M, 15M, 1H, 1D).That data goes as input for calculation MA and you should get different MA functions for different timeframes since sample of values will be different. In a practical sense you can try to use combination of faster and slower MAs (lower and higher timeframes) to identify early trend changes on the higher timeframes, or the onset of impulse moves (when slower and faster MA start to move in one direction), etc. Just use some common sense when trying to get some insight from MA, nothing complicated or magical.