Understanding the role of moving averages in trend analysis

Posted in OANDA Labs | EN | Technical analysis
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Dive into the role of moving averages (MA) in technical analysis to enhance your trend evaluation. This guide covers the impact of the MA angle and price position on trend detection, highlights the effectiveness of medium-term versus short-term MAs, and explains how to filter out false signals using consecutive candlesticks

Using moving averages to determine trading trends

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Figure 1: Relationship between the 20-day MA angle and the trend Source: TradingView
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Figure 2: Relationship between the 20-day MA and the closing price Source: TradingView

Filtering using two consecutive candles

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Figure 3: Filtering using two consecutive candles Source: TradingView
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Figure 4: False signals when using the two consecutive candles filter. Source: TradingView
Frequently asked questions

How do we use the MA to determine the trend?