Moving Average Crossovers & Momentum
Forex technical analysis encompasses the use of some of a range of indicators, including momentum indicators. In this course, we will learn how moving averages can be adapted to serve as momentum indicators, as well as marking mobile support and resistance. With Forex technical analysis, we can plot multiple moving averages of different time spans on our charts, and can create a hybrid momentum indicator, the moving average crossover. We will review the two types of moving average crossovers.
The first type of moving average crossover is price crossing over or under a moving average. The second type of moving average crossover is a shorter-duration moving average crossing over a longer, slower moving averags.
Using Forex technical analysis, we will learn under what conditions a moving average crossover signals a possible momentum and trend change.
Finally, we will talk about Momentum Indicators. These are used by Forex traders, usually to resolve certain kinds of common trader dilemmas that other support/resistance indicators can’t answer. They also give traders a better idea of future price movements.
Momentum Indicators measure the rate of change in closing prices and are used to detect trend weakness and likely reversal points. They are often underrated because of their simplicity, but the importance of simple momentum in the Forex market should not be overlooked.
In this lesson we will learn some extra handy tips that come in useful when using momentum indicators: momentum trading can be just as profitable as S/R trading.
Moving averages (or MAs) can be adapted to be momentum indicators as well as support/resistance markers. By plotting multiple moving averages of different time spans on our charts, we create a useful momentum indicator, the moving average crossover.
This lesson outlines the two types of moving average crossovers that can be used to indicate price momentum.
New traders look for a simple system that can give them a starting point of rules to follow when looking at Moving Averages Crossovers.
In this lesson we will show you an example of a simple system for generating momentum signals, and explain how it works. Note that the FX Academy does not recommend trading Moving Averages Crossovers blindly, without other supporting technical and/or fundamental indicators.