Explain the nature of the Moving Average

If you do not know what period number of MA to use, such as periodic EMA 12, 26, or 55. Here is the answer: firstly, periodic EMA 12 means price has gone exactly 12 trading sessions of time frame there. For example, the EMA in the frame M1 means it averages the closing prices of 12 minutes. However, what we do not know is that this number is very close to the number 15, which is the M15 frame.


What this means, means that exactly the EMA12 represents an approximate M15 candle. Likewise, if you use a periodic EMA of 26 then it is close to the M30 candle, following the nearest number rounding rule. And finally the 55 periods EMA, close to the H1 candle (60 minutes).

The Moving Average nature represents the trend of the crowd participating in market transactions. One more thing, the nature of the MA is the movement of the waveforms and the direction of the market along the slopes. If that is what MA is in nature, you should abandon the use of low-period MAs as it does not reflect market trends properly. Specifically, a recovery wave when you use MA 55 to determine will be much more accurate if you use low cycle MAs.

If you still do not understand, you can see the picture below for more explanation.

Chart proves that Traders should use Moving Average with large period


As you can see in the figure, the blue MA is much better at predicting a trend than the 2 low cycle MA lines (12 and 26). As soon as the price crossed the MA line from above and hit the green support line on this chart, the exact price reacted immediately to the SMA50 (penetrating from top to bottom is a strong drop). Then, when the price returned to hit the MA50, it not only could not penetrate but also reversed and went through the old support line (red line). Thus, the large period of MA is very accurate compared to the low period of MA.

You may ask what the remaining 2 small periods MAs mean, the purpose of which is usually to help you detect market reversals early. So, once you see the continuous moving averages of the low period or the periodic moving average, it means that traders on low and medium timeframes are competing and do not know what to do next.

The type of cycle should go hand in hand with the market timeframe


You are looking at the USDJPY weekly chart and have 4 consecutive bullish candles. Now, what if you used a weekly chart to find trends and used the H4 framework for trading? Try following the chart on the H4 framework.


When using the H4 chart and following the trend of the weekly chart, you should use an MA for the period of 30. Because, 1 week has 5 trading days and each trading day has 24 hours, equivalent to 6 H4 candles. Thus, when multiplying you have exactly 30 H4 candles for 1 trading week. Using a period of 30 periods of MA is the best. Looking at the chart above, you can see that the price goes very well if using this cyclical MA.

Thus, in this way you move forward for lower time frames to trade. For example, if you are intraday trading and using the H1 frame for trading, you should use the 24 periods moving average to follow the trend of the chart daily, etc.

▶️Telegram : https://t.me/cryptostationchannel
📚Edu Station : https://t.me/educryptostation
⛑Support Form : https://forms.gle/q6J62HiZmoW8pKwK8