Moving Average Cross on $GOLD : Analysis & Educational

19 ต.ค. 2023

What's Moving Average and How does it Works ?
A simple moving average (SMA) calculates the average of a selected range of prices, usually closing prices, by the number of periods in that range.

• Simple moving averages calculate the average of a range of prices by the number of periods within that range.
  
• A simple moving average is a technical indicator that can aid in determining if an asset price will continue or if it will reverse a bull or bear trend.
  
• A simple moving average can be enhanced as an exponential moving average (EMA) that is more heavily weighted on recent price action.
  

Understanding Simple Moving Average (SMA)
A simple moving average (SMA) is an arithmetic moving average calculated by adding recent prices and then dividing that figure by the number of time periods in the calculation average. For example, one could add the closing price of a security for a number of time periods and then divide this total by that same number of periods. Short-term averages respond quickly to changes in the price of the underlying security, while long-term averages are slower to react. There are other types of moving averages, including the exponential moving average (EMA) and the weighted moving average (WMA).

Popular Trading Patterns
Two popular trading patterns that use simple moving averages include the death cross and a golden cross. A death cross occurs when the 50-day SMA crosses below the 200-day SMA. This is considered a bearish signal, indicating that further losses are in store. The golden cross occurs when a short-term SMA breaks above a long-term SMA. Reinforced by high trading volumes, this can signal further gains are in store.

Now , Let's have an example on the #GOLD Chart for more undrastding :

Phase 1 : For example, here we can see that the price is stabilized below the moving average of 9 and 21 (each candle is 4 hours) and the cross of these 2 MAs has also happened and the price is trading below this level! After this incident, we saw the price of gold drop from $1930 to $1810!

Phase 2 : As you can see, in this section, we again saw the Cross of both moving averages, and after stabilizing the price above this range, gold managed to grow up to $1962! So as long as the price is traded above this level, we will continue to have a bullish view

I hope you made the most of this educational and professional analysis of GOLD !

Best Regards , Arman Shaban