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24 Сентябрь 2008

Analysis of the 50 day and 200 day EMA

Moving averages are indispensable assistants traders not only when it is necessary to determine the existence of the trend, but also in building trading strategies based on their use. There are different variations in which the starting point for the opening position is the intersection of moving averages with different periods of each other. These periods may vary. Naturally, for intradeyschikov preferred to use shorter periods. For example, the simplest strategy is based on the work of moving averages at intervals of 10,25 and 50.


A large mass of traders in its trading practices using 50-day moving average. Using a long period makes it possible to filter out market noise and get more reliable signals. One of these signals in relation to long-term trade is the intersection of the moving average with a period of 50 moving average with a 200. Quite often those crossing speak not only of the signal to buy or sell currencies, but are forced to think and not change whether this trend. Because the thing is that when we are considering moving averages with a few periods, for example, 10 and 25, these indicators is used only for short-term trend, therefore, is to differentiate between periods based on the objectives.

Today we look at how the 50-day moving average. AI with this period is often used as the long-term trade, and in short, so the range of its application is wide enough. Usually there is a gap between the MA 50 and the current market price of the tool. Therefore, the greatest concern to the trader’s point of contact is the price and moving average.

In such moments must be more cautious when deciding on the opening / closing positions as well as contact prices and AI can give two results: 1.Tsena ottolknetsya of the rolling average and will go back 2.Tsena probet moving average, with a change of direction trends. Ideality moving average that with the right selection of period-specific currency pair for a certain period of time, we get a line of support or resistance line. In the high volatility of the currency pair should be particularly careful to select the period for the moving average.

Another important element that need to know is that a trader at the opening position to guide the choice between time and price. Generally in the application of technical analysis is to account for one detail: the technical indicators are almost never worked perfectly. There is a standard rule that a trader carries out analysis and construction. Therefore, all variations on the market should be considered taking into account the natural distortion.

Figure 1 is an example of moving average with a period of 50. What good can be gleaned from such use. Well, firstly, the graph shows that the trend - down. This is also a significant gap between the price range and moving average. Secondly, the green line shows the place where the correction ended. The peak of almost upersya correction in the line of resistance, it is also moving average. This situation is far from perfect, so the decision is also taken into account other factors, with values ranging from fundamental factors to candle combinations.

Usage moving average

Fig. 1

Despite the sometimes quite good informative before us moving average, is taken into account that in order to obtain more reliable signals can be used in combination with another moving average, which would be either confirmed or refuted our assumption. You can use different combinations, but here we look at the combination of moving averages with periods of 50 and 200.

moving average

Fig. 2

Figure 2 presents a graphical situation with the two moving averages. The red lines marked with a period of 50 EMA, blue - EMA with a 200. In this case, there is a high volatility of currency pairs. Therefore, all decisions should be made more wisely and prudently. First of all, we are interested in the situation highlighted in the chart. Here you can see, began to emerge as a top-down trend followed a brief correction. Green Line marked the peak of correction. It is this area would be the ideal point for opening a short position. Have begun to emerge bearish trend, though verifies the reliability of the 200-day EMA. Thus, in this case 200-day EMA has become a line of resistance. Again, graphic examples not chosen by us specifically. Were made arbitrary area, which was applied this analysis. Therefore, the situation presented in the schedules far from ideal.

I would also like to mention one detail. Every single time, as the hour, day, week or month, are the parts of the longer time interval. For example, the daily trend can be seen as part of a week-long trend, etc. With this in mind when planning and the use of graphic analysis is thorough in selecting the time interval, which will be conducted this analysis.

In order to understand the meaning of moving averages is also understood the essence of their formation. For the 50 day moving average essence of building will be the following: the basis for the past few candles (in this case 50) and divided by the total number. Thus, we get some kind of average price. Unfortunately, this approach does not guarantee a reliable and accurate work, so in that direction by leading analysts conducted and maintained a constant work to improve the mechanism of action of these elements of technical analysis.

As for the timetable set out above, considered exponential moving average (EMA), it is worth mentioning a word about its benefits. The problem simple moving average in that it examines the entire time period. In turn, EMA (Exponential moving averages) attaches more importance to recent developments in accordance with what is happening and its formation. Therefore, in reviewing the market situation preferable to use the EMA.

In general, when you use moving averages should be guided by certain principles. For example, do not use moving averages to bestrendovom market. As for choosing the time and parameters of the rolling average, there are purely individually, as well as the main key to success - the existence of its own vision of the market.