FOREX THEORY
Moving Averages in a Trending Market
If you’re not a fan of the ADX, you can also make use of
simple moving averages. Check this out!
Place a 7 period, a 20 period, and a 65 period Simple Moving
Average on your chart. Then, wait until the three SMA’s compress together and
begin to fan out.
If the 7 period SMA fans out on top of the 20 period SMA,
and the 20 SMA on top of the 65 SMA, then price is trending up.
On the other hand, if the 7 period SMA fans out below the 20
period SMA, and the 20 SMA is below the 65 SMA, then price is trending down.
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