I have found over the many years I’ve been trading that the 10-, 21-, and 50-period moving averages work best on shorter to intermediate time frames, and I even use them on the 1-minute intraday charts I day trade with, because I find them to be just as useful intraday when day trading. The crossover of those moving averages can be a very powerful indicator of trend reversal.
Just as previous high and lows can act as support or resistance, so do the various moving averages, and I pay close attention to them as well during the intraday day-trade session.
I used to use 40-day moving averages on daily charts and found them to be quite accurate over the years but switched back to 50-day moving averages because so many institutional clients and trader friends of mine did. I find that the 50 gives you just the buffer you need to avoid the too-tight stop-loss trigger.
In addition to the other key support/resistance levels on a chart, the dotted-line moving averages I use are just as important in my trading experience to determine whether a trend may continue or reverse, especially when they intersect or juxtaposition at the same or nearly the same point on a chart of any time frame! I have found over the many years I’ve been trading and advising investors and institutions that a violation of a key moving average, such as the 50-day in particular, on heavy volume on the daily chart very often can signal a trend reversal, especially because so many large ...