(2014-09-03, 02:07 PM)theory6453 Wrote: What I'm thinking about now is potentially developing some kind of ratio between the 10 wma and 30 wma so if the difference between the 10 wma and 30 wma is greater than say 15% or 20%, then maybe I will use the 10 wma to set my stops... and otherwise I will use the 30 wma. I still need to think it over a bit before deciding if this is something I would like to implement, but this discussion is driving some great ideas and conversation and I'm really enjoying the dialogue.
That is a good idea actually. The space between the MAs and the sloping angle of the MA could potentially increase the probabilities of knowing which MA will act as support. I am going to load up my laptop and post a chart on L.CEY in a moment as it had a relatively strong recent run up and that halted with a technical pattern (double top) and corrected around 15/20% right down to the 30 week MA Where it has since reversed and gained 10%.
One thing I have noticed with equity charts, esp on the LSE, is that they are heavily based, technically, around the MAs, and less so on proper technical chart patterns.I was taught by a futures commodities trader and there that makes no use of MAs but is more technical patterns and trend lines (horizontal and sloping)
(2014-09-03, 04:59 PM)MalcolmSm1th Wrote: In the books that I have been reading (the Morales & Kacher ones) they've said something that I fundamentally agree with. And that one is to treat the moving average line as a zone rather than an absolute and definite line.
Let something drift over it and don't worry. If it heads further south the next day then be more concerned about it. In other words let the thing breach the line but if the next day it continues to do so then it's time to get out.
I have always done similar then making trend lines or lines of support or resistance. I purposely get sloppy with I throw those lines onto the page and I don't get hung up with the fact that my line goes through a price line or just misses it. It's a zone thing as M&K say which I have always subscribed to.
An example is one of my stocks that I own was Evraz (EVR.L). That plunged down through the 10MA yesterday and as such I haven't been in a rush to get out as I would have done years ago because yesterday was the first time it fell below the line. It was noticed that it's gone below the line and now today it's recovered (I guess that either peace has broken out in the Ukraine or Abramovitch is selling steel to make Russian tanks) from that drop and rose today to get to what will be this year's high mark.
Hwyl
Malc
I completely agree with what you say re. zones. I use them more so on sloping trendlines but you do see it on MAs. Buying or selling momentum can take the price beyond a MA or support/resistance line.
I have been watching EVR since isatrader posted that on this website recently. However, my chart of it shows that the 10 week MA was not breached and that the price rebounded just before the price touched the 10 week MA. See chart below. Can you please also attach your chart so I can? Are you using a simple MA which is based on the closing price?