Timing Solutions for Swing Traders: A Novel Approach to Successful Trading Using Technical Analysis and Financial Astrology

PRICE AND MOVING AVERAGES

The object of technical analysis is to get on the favorable side of the trend. An uptrend is when prices are making “higher highs and higher lows,” and a downtrend is when prices are making “lower lows and lower highs.” In an uptrend, the sum of the rallies will exceed the sum of the declines, and in a downtrend, the sum of the declines will exceed the sum of the rallies. To be able to spot trend reversal and to stay with the trend is the hardest part of trading because prices do not move in a straight line. Of the various methods applied in technical analysis to detect trend, moving average is one of the easiest methods to understand and provides good visual means of spotting a trend. Trading signals are generated when price crosses above or below the moving average. When price crosses below the moving average, it suggests sellers are taking control of the market, and when the price crosses above the moving average, buyers are gaining control. A trade may also be signaled when the shorter-term average crosses above or below the longer-term moving average. Two or more moving averages will allow a trader to see a longer-term trend compared to a short-term moving average.

In this book, we describe the use of three sets of moving averages to determine entry and exit signals and a prospective view of the longer trend. The first set consists of the short-term moving averages. The second set is made up of the mid-term moving averages, consisting of two moving ...