Creek And River


Prerequisites for this discussion:

               Configure MT4 for 5 12 50 100 Template

                Understand the Moving Averages Discussion

There are 4 Moving Averages that are important for potential trade identification.   A single moving average contains some good information but is not very powerful.   Two moving averages together show you a great deal more information.    For simplicity I have shown a simplified template with only two moving averages. 



A simple chart showing 2 Moving Averages.   The 5 Period Moving Average is the Green line and the 12 Period Moving Average is the Red Line.   Each of the lines gives you some detail of what the price is doing but when put together "The Creek" gives you even more information than the previous two combined.

Notice the Crossing Points noted in the picture above.   They are important indicators.  In fact you can subscribe to the MA Delta report and have these signals sent to you.   They indicate a change in direction and the potential for a trade opportunity.  In the example above I note two Crossing Points.   The first didn't do so much but the second Crossing Point turned out to be a great selling opportunity.

How do you know which is which ?   Lets save the answer to that question for a bit later.  

Here is another set of Moving Averages to consider.



In the above chart you can see the 50 Period Moving Average, the Green line, and the 100 Period Moving Average, the Red Line.  In this chart we don't have any crosses of the 50 100.    It would appear "The River" won't show us much good information by itself.   (Note:  If you do have a cross of the 50 100 it in itself is a good indicator of a long term trend change)

Wonder what happens when we put both The Creek and The River on the same chart.




Same chart as before but now with two sets of Moving Averages.  Can you answer the previous question about why the second 5/12 Cross indicated the start of a real price movement ?

 
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