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Moving Averages: Your Guide to Reading Market Trends
When it comes to spotting trend direction, simple moving averages are a trader's best friend. Here's how different timeframes work for you:
5 SMA - The Quick Hunter
Perfect for catching short bursts of momentum. Use this for scalping or when you need to spot rapid shifts in direction. It's responsive and catches early moves.
10 SMA - The Trend Muscle
This one tells you if the short-term trend has real strength behind it. Traders often use it to find good pullback entry points when a strong trend is running—basically, wait for price to kiss this line and then jump back in.
20 SMA - Your Swing Trading Anchor
If you're holding positions for days or weeks, this is your compass. It acts as dynamic support and resistance, constantly adjusting to market conditions. Price bouncing off it usually signals the trend is still alive.