DIRECTION OF SIMPLE MOVING AVERAGE

The Moving Average is a popular indicator and here we take a view at how it works when it changes direction, i.e. falling, or rising.

This indicator is the same as the Rate of Change ROC, because when the ROC crosses zero the same event works with the moving average, i.e. it changes direction. We shall not follow both here, only the Moving Average changing direction.

Some backtesting done proves that the n-day optimal for Moving Average changing direction is 31 days, i.e. the same optimal n for the ROC indicator. Since it is redundant to follow both indicators, the reader is refered to the post we already made about the ROC.