The 3 moving average crossover strategy is a technical trading technique that uses three moving averages (usually EMAs) of different durations to generate trading signals on the chart.
The three moving averages that we will be looking at are the 10-day EMA, the 30-day EMA, and the 50-day EMA, where:
- The 10-day EMA is a momentum indicator.
- The 30-day EMA is the value zone.
- The 50-day EMA acts as a filter for the medium-long term trend.
When the price is above all three moving averages, this is a strong signal showing both uptrend and bullish momentum in all three timeframes.
When the 50-day EMA is above the 10-day and 30-day lines, the price chart can be considered as having lost its short-term bullish momentum, if the price drops below the 50-day EMA it is a signal of a long uptrend. term is reversing into a possible downtrend.
When the price is below all three moving averages, this is a strong signal of both downtrend and downtrend in all three timeframes.
The 10-day EMA crossing above the 30-day EMA in the price zone above the 50-day EMA is a potential buy signal.
The 10-day EMA crossing below the 30-day EMA at the price below the 50-day EMA is a possible sell signal.
The 10-day EMA crossing the 30-day EMA in the area below the 50-day EMA could be a potential signal of a long-term trend reversal or a signal for a rally to watch for a “sell on rally.” “.
The 10-day EMA crossing below the 30-day EMA in the price zone above the 50-day EMA could be a potential signal of a long-term trend reversal or create a buying opportunity during a correction.
The three moving averages simply show the current direction of momentum on the chart and can be used to create a good risk/reward ratio on entry through the use of stops and stops. reasonable profit target.
The three moving averages on the chart can visually show traders both the long-term trend and whether the short-term trend still has the momentum to sustain it. Short-term moving averages can confirm long-term moving averages or show divergences. Price staying above the 50-day EMA but at the same time below the 10-day EMA can be a warning sign of a trend reversal.
A crossover of three moving averages of all three moving averages at once can be one of the best entry signals.
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