Using Moving Averages as Support and Resistance

1. They work on a strength basis
2. Use them like trend lines (breaks and bounces)

They work on a strength basis

the higher the number (MA), the stronger the Support and Resistance.

For example, in an up trend, it may not have the strength to break the 50MA (although the low might break it, the close does not).

When the price breaks a MA line of resistance, we are looking for some kind of reaction.

 Use them like trend lines (breaks and bounces)

Look for a confluence with other support and resistance

(such as ordinary support and resistance, Fibonacci lines, etc.)

Look for confluence with moving averages on other time frames

Positioning of each moving average

1. Look at the chart when it is trending
2. Are the moving averages in order?
   1. Up trend:
      1. MA’s below price
      2. 8 closest, then  21, 50 100, 200
   2. Down trend:
      1. MA’s above price
      2. 8 closest, then  21, 50 100, 200

In an up trend, we are looking for the price going up and  all the MA’s are in order and below the price

In a down trend, we want all the MA’s to be above the price.