MA cross is a crossover trend indicator.
Being a crossover trend indicator, MA cross was mainly created to enable traders to know whether the market has gained support or resistance. As a crossover trend indicator, MA cross has two moving average crossover lines, the short term moving average ( indicated by red line) and the long term moving average(indicated by blue line). Short term moving average represents the price while long term moving average represents the moving average.
Therefore, since MA cross is based on the crossover, it, therefore, follows that when the short term moving average crosses above the long-term moving average from below then that will be an indication of support point thus the trader should be trading upwards. On the other hand, when the short term moving average crosses below the long-term moving average from above,that will be an indication of a resistance point thus the trader should be trading downwards. This is indicated as from the candlesticks chart below;
From the candlesticks chart above, there are 4 points, point A, B, C and D. Point A, and B represent the crossovers points while point C is the long-term moving average and is blue in color. Point D represents the short term Moving average and is red in color.At point A, the short-term MA has crossed below the long-term MA from above thus an indication of a resistance point over there. This will signal the trader to be trading in a downwards market direction from point A since the market is starting to move downwards. On the other hand, at point B, the short-term MA has crossed above the long-term MA thus an indication of a support point over there . This will signal the trader to be trading in an upwards market direction from point B
Recommendation:If you are a day trader just use 1 min, 5 min, 15 min and 30 min timeframe while if you are a swing trader just use 1 hour and above timeframe if you want MA cross indicator to work well for you.
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