Providing support

I was struck, the other day by the support that I had from a friend: 'Any problems. with that, Andy, and I'll help you out', he said. I had been having problems with my computer and sorting something out on my website. I am largely ignorant about these things, and he had helped me out, giving me support.

'Support' also happens in trading. It seems that markets have memories and certain levels will give support to the trading price, stopping it from dropping lower.  Moving averages will quite often do this, and it happened in my daily trading system this week with the German index (Dax).2016 05 15

The price closed on one of the moving averages that I use in my decision making processes. It didn't drop below the moving average, it stopped on the moving average. The next day, the price bounced up again. Indeed, you can see other occasions on this graph where a moving average has provided 'support' to the price. Admittedly, the price is not always held up by the support, but when the price closes on the moving average, I think it is an interesting reflection on speculators views of the market. If the price closes significantly below a moving average, that, to me, is a very different message. btw, what message would that be, in your opinion?

Going back to the Dax graph here, other clues that suggest that the price is rising:

  • a moving average cross (golden cross)

  • succession of higher highs

  • succession of higher lows

Will the uptrend continue? A significant clue that it is continuing would be the price closing above a moving average, breaking through resistance. I'll talk about resistance in another post!

Are you interested in trading the markets? I have a daily trading system that takes me about 5min per day, and a weekly trading system that takes even less time. I am interested in benefiting from trends. I am not a financial advisor and cannot tell you what to do, but if you are interested in learning my simple techniques, then consider becoming a member of my website!


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