A 50-day moving average (50 DMA) is a technical indicator that shows the average closing price of a security over the last 50 days. It's a popular indicator because it's realistic and effective at showing historical price movement trends.
Concept of 50 Moving Average
1. Entry
- Candle crossover 50 MA: This refers to a situation where the closing price of a candle crosses above the
50-period moving average line. When the candle's closing price moves from below the 50 MA to above it,
it indicates potential upward momentum in the price action. This could signal a bullish trend or a potential
buying opportunity.
2. Exit:
- Distance between 50 MA and Candle: This involves monitoring the distance between the closing price
of the candle and the 50-period moving average. If the distance becomes significantly large, it may indicate
an overextended market and a potential reversal. Traders might consider taking profits or preparing for a reversal
signal.
- Candle crossunder 50 MA: This occurs when the closing price of a candle crosses below the 50-period
moving average line. It suggests potential downward momentum in the price action. This could signal a bearish trend
or a potential selling opportunity.
3. No Trade Zone (Sideways):
- Use Box Breakout Strategy: In a sideways or ranging market where the price moves within a defined range,
a breakout strategy can be employed. A box breakout strategy involves identifying a range-bound market where the
price oscillates between a support and resistance level (forming a box-like pattern). Traders look for breakouts
above the resistance or below the support level to initiate trades. This helps avoid trading during periods of low
volatility and indecision, typical of sideways markets, and instead focuses on capturing potential momentum during
breakout movements.
Concept of 50 Moving Average
1. Entry
- Candle crossover 50 MA: This refers to a situation where the closing price of a candle crosses above the
50-period moving average line. When the candle's closing price moves from below the 50 MA to above it,
it indicates potential upward momentum in the price action. This could signal a bullish trend or a potential
buying opportunity.
2. Exit:
- Distance between 50 MA and Candle: This involves monitoring the distance between the closing price
of the candle and the 50-period moving average. If the distance becomes significantly large, it may indicate
an overextended market and a potential reversal. Traders might consider taking profits or preparing for a reversal
signal.
- Candle crossunder 50 MA: This occurs when the closing price of a candle crosses below the 50-period
moving average line. It suggests potential downward momentum in the price action. This could signal a bearish trend
or a potential selling opportunity.
3. No Trade Zone (Sideways):
- Use Box Breakout Strategy: In a sideways or ranging market where the price moves within a defined range,
a breakout strategy can be employed. A box breakout strategy involves identifying a range-bound market where the
price oscillates between a support and resistance level (forming a box-like pattern). Traders look for breakouts
above the resistance or below the support level to initiate trades. This helps avoid trading during periods of low
volatility and indecision, typical of sideways markets, and instead focuses on capturing potential momentum during
breakout movements.
