Moving Averages And The Slingshot Effect by Bo Yoder
Watch the bulls and bears battle for supremacy to determine market direction.
Moving averages (MAs) are among the simplest and most effective tools in any traderís arsenal. They
offer moving areas of support and resistance, harnessing the marketís tendency to revert to the mean. The market often cycles against these ďaveragedĒ levels as the whipsaws and wiggles of a new trend begin to form. The 20-period moving average is a commonly watched indicator. When prices are above the moving average itís seen as a test of support, whereas when prices are below the moving average itís seen as a test of resistance. The way the market
treats this barrier to price movement as the bulls and bears battle for supremacy can offer strong directional clues for observant traders.