If you are getting started in trading, identifying a trend may not be the easiest thing to do. So here we can see a little example of how using EMA's such as the 20 and the 50 can help.
By placing your EMA's on the chart, you can use them on any TF, however just like every other indicator, the higher the TF the more value it holds.
EMA's can help us identify trends and we can spot what is known as dynamic support and resistance, where just like traditional support and resistance, the moving averages can now act as areas where the price can bounce or reject from as its trending. The further our EMAS move apart, the stronger the momentum is getting for that trend.
When the EMAS are moving very closely together it can help us to identify a ranging or sideways market that is not trending. A crossover can help us to identify the beginning of a trend that is about to start.
Always remember, these indicators should be used as confluences, and not to be relied on solely.
By placing your EMA's on the chart, you can use them on any TF, however just like every other indicator, the higher the TF the more value it holds.
EMA's can help us identify trends and we can spot what is known as dynamic support and resistance, where just like traditional support and resistance, the moving averages can now act as areas where the price can bounce or reject from as its trending. The further our EMAS move apart, the stronger the momentum is getting for that trend.
When the EMAS are moving very closely together it can help us to identify a ranging or sideways market that is not trending. A crossover can help us to identify the beginning of a trend that is about to start.
Always remember, these indicators should be used as confluences, and not to be relied on solely.