Usual belief in the market is that buy or look for a buying signal when the price moves above the 200 Day Moving Average and sell or look for sell signal when the price moves below the 200 Day Moving Average......but this is not true all the times.......many times the price moves above 200DMA and again moves below the 200DMA stays at the 200DMA level giving many breakouts in upward and downward direction creating a lot of confusion for traders..........so there must be a VALIDITY CHECK or look at other indicators or other conditions to approve the validity of the breakout and confidently take position or look for a entry signal in the direction of the breakout...................plz help and share your views on the following points......
1. 200 DMA combination with another period ?? DMA which works the best to validate a price break out.
2. How much helpful is the slope of the 200DMA at the time of breakout.
(a). Upward breakout when the slope of 200DMA is DOWN.
(b). Upward breakout when the slope of 200DMA is UP.
(c). Downward breakout when the slope of 200DMA is DOWN.
(d). Downward breakout when the slope of 200DMA is UP.
3. Indicators which are helpful in validating the breakout.
4. Probably the most important HOW TO IDENTIFY FALSE BREAKOUT AND AVOID WIPSHAWS.
5. Help choosing the best one from SMA, EMA, Linear Regression MA, TSF MA, Weighted MA, etc
Moving Averages are the most commonly used and probably the most helpful tool in technical analysis and trading when used in the right way.
Seniors please share what all you can about the above points and if I had missed any condition or point about the MA's please share them too......thanks in advance.
1. 200 DMA combination with another period ?? DMA which works the best to validate a price break out.
2. How much helpful is the slope of the 200DMA at the time of breakout.
(a). Upward breakout when the slope of 200DMA is DOWN.
(b). Upward breakout when the slope of 200DMA is UP.
(c). Downward breakout when the slope of 200DMA is DOWN.
(d). Downward breakout when the slope of 200DMA is UP.
3. Indicators which are helpful in validating the breakout.
4. Probably the most important HOW TO IDENTIFY FALSE BREAKOUT AND AVOID WIPSHAWS.
5. Help choosing the best one from SMA, EMA, Linear Regression MA, TSF MA, Weighted MA, etc
Moving Averages are the most commonly used and probably the most helpful tool in technical analysis and trading when used in the right way.
Seniors please share what all you can about the above points and if I had missed any condition or point about the MA's please share them too......thanks in advance.