Multiple Moving Averages
The Multiple Moving Average indicator was devised by Daryl Guppy and consists of five short-term and five long-term exponential moving averages. The short-term MA's are 3, 5, 8, 10, 12 and 15 days and the long-term MA's are 30, 35, 40, 45, 50 and 60 days but these can be varied according to the Time Frame being traded. The short-term group represent traders' view of the market and the long-term group represent investors.
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Trading Signals
Convergence and Divergence:
- When moving averages within a group are parallel and close together, the group are largely in agreement;
- When the moving averages widen, this signals divergent views within the group;
- When moving averages converge, this is a sign that the group view is changing.
Trend strength:
- Parallel long-term MAs signal long-term investor support and a strong trend; and
- Short-term MAs tend to bounce off the long-term moving average group.
Trend weakness:
- Both groups of MAs converge and fluctuate more than usual.
Trend start:
- A change in price direction accompanied by expanding MAs in both groups.
Short-term reversals:
- The short-term group diverge after crossing over before again converging.
Crossovers are not as important as spacing between the MAs in each group.
Setup
Select the pre-set file titled [Multiple Moving Averages]
from the File menu.
Use the Indicator Panel
to adjust the moving averages to suit your needs.
Example
Australian Stock Exchange Limited (ASX) is shown with multiple moving averages.
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