Understanding Bullish and Bearish Continuation in a Corrective Market Using Stochastic and MACD in relation to 40 and 200 Simple Moving Averages.


This strategy adopts the Newton’s law motion which states that action and reaction are equal and opposite. We look to apply it using simple moving average when we established Buy and Sell signal from Monthly Time. If for instance, monthly time frame gives us a sell signal, we move down to daily time frame and begin to adopt this principle.
To establish a continuation pattern, we look for price action activities at 40 and 200 simple moving average. This two moving averages is acting as price pivot or mean point for decision making and it requires a lot of understanding to exploit its usefulness.
The 40 and 200 simple moving average direction is quite important to use to gauge market sentiment. If 40 and 200 SMA is pointing upward, we establish bullish market and if downward, bearish market is confirm. If the two are flat, market is ranging. If the two are in divergent state, 200 flat and 40 upward or downward, price retest of 40 is expected. Click the link to continue readingUnderstanding Bullish and Bearish Continuation in a Corrective Market Using Stochastic and MACD in relation to 40 and 200 Simple Moving Averages

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