What will happen if you draw a line?
You will have 2 side, it can right the line and left the line or you can get above the line and below the line.
The idea behind using moving average is to divide the price into above the line or below the line. Then we will used it for analyzing market sentiment.
Let see some example:
Remember i used weekly chart, This is GBPUSD price movement
Red doted line is my 200 Moving Average. Where is the price?
it's located below the line.
Let's come to the conclusion;
1. Only place buy order if the price is above the 200 Moving Average
2. Only place sell order if the price is below the 200 Moving Average
This rule is very simple, but when you managed to master it you will discover the secret forex trading.
Enjoy your trade
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