Moving Average Crossover (CVS).
Richard O. Zamora, III; CMT • March 26, 2019
Death Cross for CVS!
Back in October, I touched upon Moving Averages and how it is a great “first step” in determining if a price trend is likely to continue. Today, I wanted to expand upon that commentary and talk about how implementing and utilizing Moving Average crossovers can help you develop more winning trades!
Let’s look at CVS Health Corp.’s (CVS) chart.
As of March 26th, (CVS) has been in a steady decline with a brief retracement. Now, traders looking to capitalize on this change in trend are presented with not only a Doji candlestick but with a Bearish Moving Average Crossover (indicated by the arrow). Clearly, entering a long position is not recommended as this short-term retracement seems over and a resumption of the downtrend appears likely as you view this "Death Cross!"
We came to this viewpoint by taking a SHORT term Moving Average and combining it with a LONG term Moving Average, to provide us with the line crossover that you see. This process can be used with amazing accuracy to visualize and confirm that a trading decision that seemed correct may NO longer be present. Using Moving Average crossovers can not only help you in achieving more winning trades but also prevent trading losses should you choose to trade in a contrary fashion.
That said, the question remains: What short term and long term setting parameters do you use in your Moving Average values? And, once established, how do you know where to place your trades?
I can help you answer that through consultation; contact me today!
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