Wed. Oct 27th, 2021

In today’s post, you’ll learn a simple 100-day moving average strategy to profit in the bullish and bullish markets.

The best part?

You can apply this trading strategy to different markets such as currencies, stocks, futures, and so on.

So let’s start …

What is the 100-day moving average and how does it work?

The moving average indicator calculates the average price for a given period.

Therefore, for a moving average of 100 days, calculate the average price of the last 100 candles.

This means that it will add the closing price over the last 100 days and divide by 100.

Therefore, you will get the average price of the last 100 days.

This is how the 100-day moving average looks like …

If you want to know why the moving average line goes up and down, check out this moving average article here.

How to use the 100 day moving average to trade with the trend

This is:

The moving average is an indicator that follows the trend because it “follows” the price.

This means that if the price increases, the moving average will also increase (and vice versa).

So how can you use the 100-day moving average to change the trend?

Simple.

When the price is above the 100-day moving average, the medium-term trend increases and you will look for buying opportunities.

If the price is below the 100-day moving average, the medium-term trend is down and you will look for selling opportunities.

This is what I mean …

Now …

Just because the price is above the 100-day moving average doesn’t mean you have to press the buy button right away.

Because?

Because the market could expand excessively and be about to make a setback or a complete investment.

Therefore, you want to wait for the price to reach a value area, which is what I will discuss below …

Value area: How to buy low and sell high

You ask yourself:

“What is a value area?”

It refers to an area of ​​the chart where the buy / sell pressure could intervene.

For example:

Support is an area of ​​value in which buying pressure could intervene and raise the price.

Resistance is an area of ​​value where selling pressure could intervene and bring the price down.

Now, when you combine this with the 100-day moving average, you can find areas of the chart to buy low and sell high.

This is how it works …

When the price is above the 100-day moving average, look for close support. And when the price is below the 100-day moving average, look for close resistance.

An example

Now you don’t want to buy blindly at the support service as the price could break it.

Instead, you want to wait for a signal to tell you that the purchase pressure is increasing before you pull the trigger.

Read also: Support and Resistance Negotiation Strategy: The Advanced Guide

And this is what I will discuss below …

Entry Trigger: How to time the entry accurately so you can avoid getting into operations too early

An entry trigger is a specific pricing pattern that tells you when to enter a transaction.

You can use tools such as chandelier patterns, moving medium crossing, and more. But for this article we will use chandelier patterns.

In particular:

Let me explain…

Patterns of bullish investment chandeliers

A hammer is a pattern of bullish investment chandeliers that shows rejection at lower prices.

Here’s how to recognize it:

  • Little or no top shade
  • The price closes at the top of the range
  • The lower shadow is about 2 or 3 times the length of the body

An example:

Later, you’ll learn how to use this chandelier pattern to time your entry.

But for now, we continue …

Bullish bullish pattern

The bullish bullish pattern is another pattern of chandeliers that shows rejection at lower prices.

Here’s how to recognize it:

  • The first candle has a bearish closure
  • The body of the second candle “covers” completely the body of the first candle (regardless of the shadow)
  • The second candle closes bullish

This is what I mean …

Now, let’s move on to patterns of bearish investment chandeliers …

Shooting star

A shooting star is a pattern of bearish investment chandeliers that shows rejection at higher prices.

Here’s how to recognize it:

  • Little or no shadow
  • The price closes at the bottom of the range
  • The upper shadow is about 2 or 3 times the length of the body

An example:

And finally…

Bearish pattern

The sinking bearish pattern is another chandelier pattern that shows rejection at higher prices.

Here’s how to recognize it:

  • The first candle has a bullish closure
  • The body of the second candle “covers” completely the body of the first candle (regardless of the shadow)
  • The second candle closes bearishly

This is what I mean …

Now you’re probably wondering:

“How can I apply all this to trade?”

Well, don’t worry.

Because in the next section, you’ll learn a 100-day moving average trading strategy based on the concepts you just learned.

Here we go…

A 100-day moving average strategy that works

This is how it works …

# 1: The price exceeds the 100-day moving average

This tells you that the market is on an uptrend and that you want to look for buying opportunities.

# 2: The price is repeated towards assistance

Now you don’t want to buy blindly at any level of the chart. Therefore, you will expect the market to retreat to a value area (such as support, respected moving average, etc.).

# 3: A valid input trigger

If conditions no. 1 and no. 2, look for a pattern of bullish investment candlesticks to know that buyers are momentarily controlling and you can enter the next open candle.

Here you have an example …

And it’s the opposite for a downward trend.

Here you have an example …

As for losses and exits, I will discuss more in these articles below …

Conclusion

So here’s what you learned:

  • The 100-day moving average is an indicator that follows the trend that calculates the average price of the last 100 days.
  • If you want to change with the trend, look for buying opportunities when the price is above the 100-day moving average and selling opportunities when the price is below.
  • Don’t buy blindly just because the price is above the 100-day moving average. Instead, wait for the price to reach a value area, then look for a bullish trigger to enter the time.

Now, this is what I would like to know …

How is the 100-day moving average used?

Leave a comment below and share your thoughts with me.

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