Multiple Moving Averages
The Multiple Moving Average indicator was devised by Daryl Guppy and consists of six short-term and six long-term exponential moving averages. The short-term MA's are 3, 5, 7, 10, 12 and 15 days and the long-term MA's are 30, 35, 40, 45, 50 and 60 days but these can be varied according to the Time Frame being traded. The short-term group represent traders' view of the market and the long-term group represent investors.
Active or Reactive?
Many investors follow active strategies but end up being reactive, rotating in and out of stocks at the wrong time.
Colin Twiggs' free weekly review of the global economy will help you identify market risk and improve your timing.
Convergence and Divergence:
- When moving averages within a group are parallel and close together, the group are largely in agreement;
- When the moving averages widen, this signals divergent views within the group;
- When moving averages converge, this is a sign that the group view is changing.
- Parallel long-term MAs signal long-term investor support and a strong trend; and
- Short-term MAs tend to bounce off the long-term moving average group.
- Both groups of MAs converge and fluctuate more than usual.
- A change in price direction accompanied by expanding MAs in both groups.
- The short-term group diverge after crossing over before again converging.
Crossovers are not as important as spacing between the MAs in each group.
Apple [AAPL] is displayed with multiple moving averages.
Mouse over chart captions to display trading signals.
- Widely-spaced down-sloping long-term moving averages [D] signal a strong down-trend
- Converging long-term moving averages [C] indicate uncertainty
- Go long [L] when long-term moving averages cross over, with the longest at the bottom
- Retracements [R] that do not disturb the long-term moving averages spacing present opportunities to increase your long position
- Widely-spaced up-sloping long-term moving averages [U] signal a strong up-trend.
Select Multiple Moving Averages in the left column of the Indicator Panel. Adjust the settings as required and save using the [>>] button.