Price / SMA Crossovers

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Price / SMA Crossovers

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Moving Averages (MA) help identify price trends and potential support and resistance levels.   Two main MA types are the simple and exponential.

Simple Moving Averages (SMA) are calculated by taking an average of the closing prices for X-number of periods depending on the SMA used.  SMA (5) uses 5 periods, etc.

Price/SMA cross occurs when the price crosses an SMA, either above (bullish) or below (bearish).  Since Price moves faster than a moving average (SMA), this type of cross typically occurs before an SMA/SMA cross.  Hence, Price/SMA cross is more sensitive and provides earlier indications but can also give more false readings for trend developments.

SMAs change slower than EMAs and thus is better for traders with longer time frames.  EMA reflects price changes faster and thus is better for short-term traders.  Also important are the time frames used to calculate the SMAs and EMAs – long-term traders should use longer time frames (60+ periods), medium-term traders should use 20-60 periods while short-term trades should use 5-20 periods.

Support and resistance levels.  MAs, especially SMAs, can also be used as support and resistance levels.  During strong up(down) trends, prices tend to bounce off of the support and resistance lines.  When prices break-through the support and resistance lines, it can indicate consolidation or a reversal.

What is SMA Crossover?

SMA Crossovers is a technical analysis technique used in crypto trading to identify potential buy or sell signals based on the intersection of two Simple Moving Averages (SMA) with different time periods.

A Simple Moving Average is a popular technical indicator that helps traders analyze trends by smoothing out price fluctuations over a specific time period. It is calculated by averaging the price of an asset over a certain number of periods.

In SMA Crossovers, two SMA lines are used – a shorter-term SMA and a longer-term SMA. The most commonly used SMA periods are the 50-day SMA and the 200-day SMA. When the shorter-term SMA line crosses above the longer-term SMA line, it is considered a bullish signal, indicating a potential buy opportunity. Conversely, when the shorter-term SMA line crosses below the longer-term SMA line, it is considered a bearish signal, indicating a potential sell opportunity.

altFINS signal summary section offers pre-defined blocks with SMA crossovers: SMA 5/10, SMA 10/20, SMA 20/30, SMA 50/200, SMA 100/200.

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  1. Foundation of TA.
  2. Strategy: Trading moving average crossovers.
  3. Strategy: Pullback in Up (Down) Trend.
  4. Strategy: Momentum & Uptrend.
  5. Strategy: Oversold at Support (Overbought at Resistance).
  6. Strategy: Trading ranges.
  7. Strategy: Trading key levels (breakouts and approaches).
  8. Strategy: Trading chart patterns.
  9. Risk management.
  10. Margin account trading & Short selling.