Moving average
It is one of the oldest and most widely used indicators.
It is a indicator that shows you the price rate over a certain time period determined by you.
For example: if we assume that the price of the pound is now GBP / USD = 1.4000 but you wanted to know how much the price of the pound during the previous ten hours to know whether the price is now higher than the average in 10 hours or less?
You can do this by using a graphic program where the program will draw a line representing the price rate within 10 hours.
This line will appear on the graph to indicate the price rate within 10 hours.
How could WFP calculate this?
The program has collected the closing price of the last 10 hours and divided it by 10 and the resulting figure is the rate of the pound rate within 10 hours.
I have collected 10 hours and divided by 10 because you chose the question for a period of 10 hours, even if you chose the question about the price rate within 100 hours to collect the closing price of the last 100 hours and divided by 100.
So for any time period you choose.
As the price moves hour by hour, the program will collect the closing price for the last 10 hours and divide it by 10.
The result will be a line that moves with the price action. This line shows the price of the 10-hour pound or any period you choose.
As shown in the following figure:
What is the benefit of this indicator?
This indicator is of great benefit in determining the direction of the market when you know that the rate of the price of the pound now is higher than the rate of the price within the previous 10 hours meaning that there is an excessive demand on the pound at this hour made the price rises from the average within 10 hours.
This is a sign that there is a growing desire to buy the pound and thus a sign that it may rise.
When the candlestick is above the average moving average, this indicates that this rise may continue. This means that the price of the currency will continue to rise.
When the candlestick is below the average moving average, this indicates that this decline is likely to continue, which means that the currency will continue to decline as the price of the currency will continue to decline, as the continued decline of the candlesticks means that the price of the currency will continue to rise.
The possibility of knowing the rate for more than one period at the same time.
You can ask to know the rate of the price of the Fairy within a period of 10 hours and at the same time the price rate within 30 hours.
This will appear in the graph in the form of two lines, one representing the price rate within 10 hours and the other representing the price rate within 30 hours.
You can draw several lines per line representing the price rate over a different period and you can make each line a color so you can differentiate between them just by looking.
what is the benefit of knowing the price rate for two different periods?
To give us a clearer indication of market trends. In the previous example, we asked the chart to draw two lines for us, one representing a 10-hour short-term rate and one a 30-hour price.
When Crossover crosses the line that represents the shortest period above the line representing the longest period, it is a sign that there is an ever-increasing demand to buy this currency - that is, to sell it if it is an indirect currency - which makes the price rate within 10 hours higher than the 30 hour .
This invites us to buy the currency because the currency will rise more and more over time.
If it is an indirect currency we will sell it because the rise of candles more and more sign of falling indirect currency price.
As shown in the following figure: