Repeat the steps below for each of the required moving averages. Alter the N value to calculate the EMA you want. For example, use three to calculate the three-period average, and use 60 to calculate the period EMA. Calculate the SMA for N. Calculate the Multiplier using the same N value. Repeat the process for the next N value, until you have the EMA reading for all 12 moving averages.
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Captures the inferred behaviour of traders and investors by using two groups of averages. Uses fractal repetition to identify points of agreement and disagreement which precede significant trend changes. Used to assess the degree and extent of trading activity. Excessive trading activity can destabilise strong trends.
Trend analysis enables more effective selection of appropriate trading strategies such as breakout, trend continuation etc. Can be applied to long side and short side trading. Can be applied to intraday trading. Also used for longer term investment style analysis. TACTICS Join established trends at points of price weakness Join established trends breaking to new highs Trade breakouts using rally dips and rebounds Trade downtrend rallies as rallies rather than trend breaks Recognise trend breaks as they develop RULES Degree and nature of separation in the long term group define trend strength and weakness Degree and nature of separation in the short term group define the nature of trading activity.
Degree and nature of separation between the two groups of moving averages define the character of the trend. Compression shows agreement on price and value.
Compression of both groups at the same time indicate major re-evaluation of stock and potential for a trend change Trade in the direction of the long term group of averages The relationships between the groups provide the necessary information about the nature and character of the trend.
Guppy Multiple Moving Average - GMMA
GMMA – Guppy – Indicator