Short term traders always initiate the trend, but they need the support of the long term traders in order to keep it going. Bracket the narrow trading range with a buy order above the high of the range and a sell order below the low of the range. If we are thinking of buying KSC then it is worth waiting for the bubble to collapse. On weekly chart below we can clearly see that for over a year price was trapped below resistance line and above and averages. Code of Conduct Code of Conduct.
Name stands for Guppy Multiple Moving Averages. It is basically two sets of moving averages:. I use expotential averages, I also add to this set and averages. You can join it with other indicators. I like to use it with trend lines and, surprise, with Fibonacci. It is always good to draw trend lines. This can be very helpful in opening trades like on weekly chart below:. We saw a signal on MACD but price was below resistance line. After it breakout above resistance we saw that it started to work as support and buyers came in.
This was the best place to enter long. On weekly chart below we can clearly see that for over a year price was trapped below resistance line and above and averages. Finally, bulls managed to breakout above resistance line and nice uptrend began.
Check also how blue and red averages reacted. They started to get wider and in a trend there is a bigger distance between blue and red averages. On many times during a correction longer averages so the red ones will work as support. In this example we have a support from red averages and resistance from trendline. GMMA works great combined with Fibonacci. We have a good picture of trend and current situation.
Getting the high quality history data. Backtesting of the system. Bollinger Bands are a volatility based indicator, developed by John Bollinger, which have a number of trading applications.
There are three lines that compose Bollinger Bands: A simple moving average middle band and an upper and lower band. These bands move with the price, widening or narrowing as volatility increases or decreases, respectively.
The position of the bands and how the price acts in relation to the bands provides information about how strong the trend is and potential bottom or topping signals.
Bollinger Bands are used on all time frames, such as daily, hourly or five-minute charts. Bollinger Bands have two adjustable settings: The Period is how many price bars are included in the Bollinger Band calculation. The number of periods used is often 20, but is adjusted to suit various trading styles.
The Standard Deviation is typically set at 2. The higher the Standard Deviation, the harder it will be for the price to reach the upper or lower band. Overview After several publications on how to build strategies in Visual jforex and tracking of various strategies performances I decided to write one more article on several strategies usage at the same time. So in this publication I will cover 3 different strategies and its pros and cons on its usage simultaneously.
Strategies logic There are 3 strategies working in different pairs: All 3 strategies has very simple positions opening logic it uses 5 min. RSI to determine position opening. RSI thresholds are configurable and can be change on strategy start: The GMMA acts as a confirmation. The 3 and 5 day moving average have already turned down on the day of the decision point line. Wait another day and the compression of the 8, 10 and 12 day averages is clear.
The initial turndown of the 3 and 5 day EMA at the top of this short term group, in conjunction with the close below the trend line, confirms the exit decision. This is not the resumption of the up trend, but it is an opportunity to get out at slightly better prices. When we apply the GMMA to assist in this type of exit it is within the context of an already identified speculative bubble.
With this knowledge we are prepared to apply the GMMA in the appropriate fashion. The trend is well established and typically the trader or investor monitors this by observing the degree of parallel separation in the long term group of averages.
Our concern arises when the short term group of averages moves rapidly upwards. This matches the three days on the bar chart which have a much greater price range than normal. These days also include gap openings where the open is higher than yesterdays high. Some temporary exciting news is driving the price. This has the possibility of setting a new trend, or of being a short lived rally. This is not the same as the speculative bubble because it is built on a well established trend.
This bubble may attract some speculative activity. This is of no concern if we already hold the stock because can expect the bubble to collapse and bring prices back to the underlying trend. If we are thinking of buying KSC then it is worth waiting for the bubble to collapse. The leading indication of the weak bubble is the sudden break downwards in the 3 and 5 days EMAs, shown in the circle.
The key confirmation comes when prices drop back to the trend line, and then bounce away. The short term group of averages rapidly fall back, and then rebound. The degree of separation between the two groups of averages at this compression and rebound point remains essentially unchanged when compared with previous rebound points.
These are shown by the thick black lines. When this consistent separation is also matched with a rebound from the trend line on the bar chart then we can be confident that the underlying trend is intact. It is this combination of characteristics that allows us to treat the sudden price rise as an unthreatening bubble.
The development is very short lived and it takes off from a very solid base. This is quite different from the bubble characteristic which also threatens the end of the trend. Some bubbles smash down into the underlying trend and cause it to collapse. These are not benign bubbles, and they have several different characteristics from the weak bubble in KSC.
The distinction starts with the nature of the underlying trend shown by the long term group of averages. Area A on the NCM display shows continued expansion in the long term group. This trend is still developing. It is not stable as with KSC where the long term group is broadly parallel. The comparative lack of soundness is also evident on the bar chart. The NCM trend is easily defined with a straight edge trend. The initial clue to the end of this fast move trend is proved by the close below the trend line.
The final push in prices is consistent with this steep trend which means the final bubble is comparatively small when compared to the speculative bubble with TIF. It is the GMMA relationship in area B, and just prior to this, which signal the high potential for a bubble collapse that leads to a trend change. In the days immediately prior to the decision point all the short term group of averages have turned down.
By the time we get to point B there is a clear downtrend in this group with the result that they crossover very quickly and clearly. It is the speed of this crossover that tells us that traders have dumped this stock in a major way. If we wished to delay our exit decision, then the lack of any rebound activity confirms we should have made an exit a few days earlier when we had the opportunity.
By then the long term group of averages have all started to roll over, or move sideways. This provides additional confirmation of trend weakness. The key confirmation is the close below the trend line. This is the leading indicator of trend change , and it is confirmed by the way the short term group in the GMMA has already moved to a crossover point. Bubbles are managed using the GMMA as a confirming indicator. The nature of the bubble collapse, and the nature of the underlying trend as revealed by the GMMA all help the trader to decide if the bubble is a temporary event, of it presages the collapse of the underlying trend.