There are different indicators in the forex market. When you see the technical analysis report, you will find a common term in that which is called the moving average. This indicator is an important part of the trading. It helps smooth out price action by filtering out the “noise” from random price fluctuations.
If you know the secrets of moving average, it will be easy for you to understand when to invest and what to do. Today, I will share 3 hidden secrets of moving average which most of the people don’t know accurately.
Great Reversal Or Retracement Targets and Divergence
As for price the of the currency and other things of the forex market builds on a trend with either higher highs and lows OR lower lows and highs, so the trend ultimately reaches a collapse because of the momentum fading away with each following newer higher or low. There are many interesting parts in the great reversal.
If you have a specific target for the profit when seeing the divergence, then let me know you that when difference appears, the trader can expect the price to redo back to an intermediate moving average. It can be anywhere between 100 to 150 ema.
However, it is also possible that the price can miss the moving average band. If the price comes close to the moving average for this, then a trade can consider the divergence to be unrelated for the future price movements. So, if you have the proper knowledge of this, you can avoid losing money in the FX market.
The Dynamics of Gravity
Maybe you are surprised that how gravity has come to the forex market. Though this thing stands for physics, the similar concept is also applicable to the forex market. In physics the gravity means the relation between the human and the earth, on the other hand, gravity in forex means the relationship between the price and the moving average.
Like a human, when a price has more speed, it can move more distance away from moving averages. On the other hand, when the price has less speed, it is unable to go for a long distance from the moving average. The angle between two different moving averages will indicate the price has enough speed to break away from its average. This is important when you want to start a new trading. Proper knowledge of it can help you differently.
EMA’s = Quick Sand or S&R
The above one has explained the speed part of the equation, and this section focuses on the gravity part. As a trader, you need to know whether the gravity is in play and is it strong or not. You can justify it by checking the angles of moving averages. If the moving average is flat and they don’t have, and no edge is moving, it indicates high gravity pull. The opposite means the low gravity pull.