Crypto Academy Week 4 Homework For @stream4u || 6th March 2021 || Done By @preshdan

Homework Task(Topic 4): What is 200 Moving Average, how and when we can trade/invest with the help of 200 Moving Average? Show different price reactions towards 200 Moving Average

THE 200 SIMPLE MOVING AVERAGE

This is bethought by traders and market analyst to be an important index that indicates or determine the overall long-term market inclination in a particular direction . This is seen on a chart line and turn or twist; to make flexuous indicator either higher and lower alongside longer-term price. Sometimes the 200-day SMA serve as a mysterious support level especially when price is surpassing the moving expectation or a force of opposition when price is downstream of value.
The 200-day SMA is frequently used in store or supply trade in order to ascertain the prevalent market tendencies. It covers approximately 40 weeks trading. which covers roughly 40 weeks of trading.
It is considered an upturn when a stock value stays above the 200-day SMA within the daily context of time.

Being a long-term moving average, the 200-day SMA is frequently used together with some other, shorter-term moving averages to display the market trend and as well used to evaluate the potency of the trend as shown by the interval gap between moving average lines.

WHAT TO KNOW

• TRADE BREAKOUT THROUGH THE 200-DAY MOVING AVERAGE ONLY IF VOLUMES ARE HIGH

Although 200-day SMA acts as support, but a noticeable move is not caused as a result of absence of volumes. The authentic move is obvious when the cost fractures the SMA at a time when trading volume is high.
A reasonably large price move follows subsequent to high volume breaking lower.

• BE CERTAIN THAT THE PRICE ACTION REVERENCES THE 200-DAY MOVING AVERAGE

It is important to know the interest of traders controlling the stok before having anything to do with the 200-day moving average.
The price movement in any stock is influenced and controlled by traders. This should prompt one to consider whether these traders that controls the price movement are really taking a look at the 200-day SMA or considering another chart structure or trafficator to make their trading judgement.

• 200-DAY MOVING AVERAGE BREAKOUTS NEEDS PATIENCE

200-day SMA demands that cautious to be taking when trading breakouts. It is advisable to wait to observe if the price breaking the 200-day moving average is able to end above average. This is because there is no prize given to one for being the first to engage a trade.

• HIGHER WIN-LOSS RATIO IS GIVEN BY BOUNCES

It is imperative to know that the market direction incites about 20% of the time while enjoying breakouts resulting from being at the appropriate side of the trade. To that effect, in order to maximize profits, one must apprehend how to trade the other remaining 80% of the time. Nonetheless, readiness to take advantage of bounce trades off the 200-day is advisable especially when the 200-day moving average is noticed.

• WHEN TRADING 200-DAY, THE VOLUME INDICATOR THE SHOULD BE USED

When trading with the 200-day moving average, volume is a necessity. The store or supply is presumably ephemeral and sure depending on the amplitude of volumes.
The average, if the cost meets the 200-day moving average with low volume, may prevent the price action or make support attainable on a pullback.

SUMMARY

Debatebly, moving averages are much popular pointer in all of technical analysis.
The 200-day SMA is one of the much relevant moving averages.

• Go long when the cost is high

• Go short when the cost is underneath

The above are the basic trading rules for the 200 SMA

Below are the groups of 200-day SMA signals:

• 200-day SMA purchase signals

Bullish Breakout and
Support Bounce

• 200-day SMA sell signals

Bearish Breakout and
Resistance Bounce

Thanks @stream4u This is my entry

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