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Some Forex traders use moving averages to find support and resistance. And they simply buy and sell off of them. You see, when price is above a moving average and price comes down to the moving average… a lot of the time they will buy off of it.
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When price is below a moving average and price retraces back up to that moving average. Forex traders will sell off of it. Is this a fluke? Does this happen by chance? Or, is it just dumb luck that this happens? Not at all!
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Forex traders use a lot of different moving averages to buy and sell off of based on certain technical factors in the market. But from what I have seen… here are the most effective moving averages traders use to buy and sell off of when price either drops down and touches it. Or when price retraces back up and touches it.
Forex Traders Use Moving Averages To Buy And Sell Off of!
21 EMA = Exponential Moving Average.
50 EMA = Exponential Moving Average.
100 EMA = Exponential Moving Average.
200 EMA = Exponential Moving Average.
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Now we can’t forget the Simple Moving Averages? I honestly feel that the EMA’s are more powerful. And truly believe that Forex traders use them more so than the Simple Moving Averages…
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21 SMA = Simple Moving Average.
50 SMA = Simple Moving Average.
100 SMA = Simple Moving Average.
200 SMA = Simple Moving Average.
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Some Forex traders use smaller moving averages like the 9 and 13 for other purposes. But I just wanted to show you this to learn from… Are any of these moving averages part of the Forex Divergence trading system? No! If you are NEW to Forex trading then this information is very valuable for sure.
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Let’s take a look at a chart so you can see what I am talking about…
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Here are some examples where they are selling off the 21 Exponential Moving Average:
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