Sunday, 6 October 2013

Current daily chart trends

A follow up to my previous post, Moving Averages and Me

Current daily chart trends for the markets I regularly track on this site are:

S&P 500 no trend
ASX 200 no trend
Nikkei no trend
Gold down trend
Silver down trend
AUD/USD up trend
EUR/USD up trend
USD/JPY down trend
GBP/USD no trend

Charts follow.

S&P 500 no trend


ASX 200 no trend


Nikkei no trend


Gold down trend


Silver down trend


AUD/USD up trend


EUR/USD up trend


USD/JPY down trend


GBP/USD no trend



Moving Averages and Me

Regular readers may be surprised that I use moving averages in my trading, when my posts on this site almost exclusively focus on trend lines and chart patterns. It may also surprise that my trading is based on signals from the hourly charts, given that most charts I post are dailies or weeklies.

I'll attempt to explain.

Why moving averages?

Trend lines and especially patterns are a great way of keeping ones mind open to what the market might do. That's all well and good, but trading on the basis of what the market might do is financial suicide. To profit from trading you must respond to what the market is doing, and moving averages are an objective measure of what the market is doing.

How do I apply moving averages to measure the trend?

I place three simple moving averages (MAs) on my charts. The 4 period, 18 period, and 40 period, no matter the time frame. All are calculated from the closing price.

How do I interpret the trend of the market using moving averages? Simple. There are three options.

Up trend: If price is above the 18, and the 18 is above the 40.

Down trend: If price is below the 18, and the 18 is below the 40.

No trend: Anything else.

One of my routines as a trader is to check the daily chart trends of the markets I trade, at least once a week on the weekend, and often mid-week as well.

How do I use information about the daily chart trend?

If the market shows no trend, I won't trade it.

If the market shows an up trend or a down trend, I look to the hourly chart for trade opportunities aligning with the daily chart trend.