Trading on Moving Averages (F).
Richard O. Zamora, III; CMT • October 29, 2018
An Important Analytical Tool in Action!
Moving Averages is an important first step in determining if a price trend is likely to continue; and, often traders base their decisions on whether the price action of a security is above or below this indicator.
Essentially, a Moving Average is a customizable calculation of a defined time period and the closing price of a security. These mathematical computations can vary from simple to complex, based upon the desired analysis. Its interpretation provides the trader with another valuable insight as to what constitutes a market trend.
Whichever preferred method that the trader wishes to analyze, be it from a simple moving average to an exponential one, the fact remains that its use has been and continues to be important in the Technical Analyst’s toolbox. Let’s examine how we can use this valuable methodology as it applies to Ford (F).
Looking at the chart, we see that Ford (F) has been in a downward trend since late July, with the price action (the closing price) for the majority of the time – falling BELOW a 30 Day Simple Moving Average line. Observant traders who were looking for a trend reversal noticed a potential upward breakout in late August and early September. However, this did not materialize and the downward trend continued.
As of October 29th, we are again presented with a potential trend reversal – since Ford’s (F) price has closed ABOVE the Simple Moving Average (SMA). The question is: Do you trade it? I can help you answer that through consultation; contact me today!
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