If you believe in the creed of "trend is your friend" in technical analysis, then the moving average will benefit you a lot. The moving average shows the average price at a specific time in a specific period. They are called "moving" because they are measured at the same time and reflect the latest average.

One of the disadvantages of EMA is that it lags behind the market, so it may not be a sign of trend change. In order to solve this problem, the short-period moving average of 5 or 10 days can better reflect the recent price trend than the moving average of 40 or 200 days. Alternatively, the moving average can be used by combining the averages of two different time spans. Whether using the 5-day and 20-day moving averages or the 40-day and 200-day moving averages, when the short-term average crosses the long-term average, a buy signal is usually detected. On the contrary, when the short-term moving average goes down through the long-term moving average, it will prompt the sell signal.

2. Support and resistance

Support level and resistance level are the points in the chart that continue to bear upward or downward pressure. The support level is usually the lowest point of all chart modes (hourly line, weekly line or annual line), while the resistance level is the highest point (highest point) in the chart. When these points show a recurring trend, they are considered as support and resistance. The best time to buy/sell is near the unbreakable support/resistance level. Once these levels are broken, they often become reverse obstacles. Therefore, in the rising market, the broken resistance level may become the support of the rising trend; However, in the falling market, once the support level is broken, it will turn into resistance.

3. Lines and channels

Trend line is a simple and practical tool to identify the direction of market trends. An upward straight line is formed by connecting at least two consecutive low points. Naturally, the second point is definitely higher than the first point. The extension of the straight line helps to judge the path that the market will follow. Upward trend is a special method to identify support line/support level. Instead, draw a downward line by connecting two or more points. The variability of transaction lines is related to the number of connection points to some extent. But it is worth mentioning that the points don't have to be too close. A channel is defined as an upward trend line parallel to the corresponding downward trend line. The two lines can represent the price rising, falling or horizontal channels. The common property of channels supporting the connection point of trend line should be between the two connection points of their reverse lines.

Step 4 look for trends

The first sentence you may hear about technical analysis is the following proverb: "Trend is your friend". Finding the dominant trend will help you see the overall market direction and give you a sharper insight-especially when short-term market fluctuations disrupt the overall market. Weekly chart and monthly chart analysis are most suitable for identifying long-term trends. Once you find the overall trend, you can choose the trend within the time span you want to trade. In this way, you can buy down in the rising trend and sell up in the falling trend.