Normal
The 200 day can be a little lagging. I prefer the 50 day. The challenge with the 200 day is if you enter a trade on a cross above it (price bar closes today above 200 ma and yesterday it was below it), once you get a very strong trend price tends to create more and more distance above the 200 MA line. What winds up happening is that if you exit strategy is to sell when price crosses back below it you might give up quite a bit of profit.Don't get me wrong, a long holder of a stock would want to see price above the 200 MA certainly.One thing to pay attention to is the slope of any moving average line. If price is in a downtrend and a candle or price bar moves above the average, if the line is still slanted or sloping down it may not be as high quality of an entry. In general, better breakouts happen when you've had a basing or flatening out period of a stock and it starts to run.I do you the 50 day moving average but tend to optimize entries with other indicators as well.One interesting thing I was looking at was the 20 month moving average on the S&P 500 Index. Since 1994 price crossing above or below the 20 month moving average happened 4 times. 2 long signals and 2 sell(or short) signals.Still think technical analysis is inferior to fundemental analysis?
The 200 day can be a little lagging. I prefer the 50 day. The challenge with the 200 day is if you enter a trade on a cross above it (price bar closes today above 200 ma and yesterday it was below it), once you get a very strong trend price tends to create more and more distance above the 200 MA line. What winds up happening is that if you exit strategy is to sell when price crosses back below it you might give up quite a bit of profit.
Don't get me wrong, a long holder of a stock would want to see price above the 200 MA certainly.
One thing to pay attention to is the slope of any moving average line. If price is in a downtrend and a candle or price bar moves above the average, if the line is still slanted or sloping down it may not be as high quality of an entry. In general, better breakouts happen when you've had a basing or flatening out period of a stock and it starts to run.
I do you the 50 day moving average but tend to optimize entries with other indicators as well.
One interesting thing I was looking at was the 20 month moving average on the S&P 500 Index. Since 1994 price crossing above or below the 20 month moving average happened 4 times. 2 long signals and 2 sell(or short) signals.
Still think technical analysis is inferior to fundemental analysis?
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