In this video, we're taking a look at how to identify market trends, we'll be using the exponential
moving average and the makdisi, the exponential moving average is a indicator the plots, the average
price of a security over in.
Periods you can select.
So, for example, if it's 20 and I'm on this chart, I'd be 20 days.
It would give you the average price over the last 20 days that each candle close and it will just move
up and down right along with it.
The idea, of course, is that if it's rising, we're in an uptrend.
If it's falling, we're in a downtrend.
There are a multitude of moving averages that people use.
They are a guide stick.
I would not use them for much more than that.
And the Makdisi is an indicator that has.
The.
Moving average convergence divergence is actually what it's called, and you can see it's got moving
averages a quicker and a slower one, and then a histogram measures the difference between the two.
It turns on trading view, it turns green.
If it goes positive and it goes negative, it turns red.
Both of these can be used to show.
The trend or perhaps the overall attitude of the market, if you like.
And you can see that there's the moving average it places on top of the chart, you can change it.
By clicking this.
So let's go ahead and do the 50, because the 50 day Emma tends to be widely followed, you can see
that it is sloping up.
So that tells you the trend we have been gaining over time.
With the D, you can see that the histogram has been green this entire time, with the exception of
a couple little moves, this area here, it went red.
So the trend definitely was dropping, but the longer term trend was still higher.
So this shows you a little bit of a confluence of.
A pullback in a longer term trend, I would not classify that as a negative trend or simply a pullback,
it's something that you typically get.
You can see that the histogram in the makdisi had gotten lower as we had risen.
That shows that we are losing momentum and that was the first sign of trouble and then the low had gotten
lower, so that shows that the sellers are starting to become more aggressive.
There's a lot of different ways you can use these indicators, and they are some of the more common
ones that you'll see.
Another thing that people will pay attention to is moving average crossover.
So when the quicker one crosses over the lower one underneath, that's when you may start to see a little
bit of momentum pick up.
And we did to a point wasn't the greatest signal.
But the most simple way to use this is to simply pay attention to the histogram, whatever side of the
zero signal line we are on tells you what the mode of the market is, the momentum.
And then, of course, if you use it with a moving average, like the 50 day, it can keep you on the
right side of the market.
So even though this was negative, the 50 day was still relatively bullish.
We did flatten out a little bit, but we hadn't rolled over to the downside.
So you would have known not the short.
You can see that we went higher and again, like I said, we got a little bit of divergence, lower
momentum to the upside on the next tie, and then you started to see the histogram go red and it went
really red.
The FEMA started to drop.
And that's a sign that we're entering the downtrend.
I'll go ahead and put these indicators back on.
This chart here and I will use the same settings.
Just to show you how it how it works.
OK, so this is your moving average convergence divergence indicator, just as we saw in the last time
and this setting here, I will change to 50 days again.
You can see that the indicator gets a little flat here and you'll see that when you're consolidating,
but then we make a decidedly negative move, it lines up with the histogram right here going very red
all of the sudden.
And that shows you which direction we're going in.
Doesn't have a lot of momentum.
It's a very gentle downward.
Move as the histogram is fairly weak, we got a nice little pop here and we did break the moving average,
but the moving average hadn't turned up yet.
So this just shows you that we've had a nice retrace.
And once we break down below there, the red picks back up and we start to fall with a little bit more
authority.
These two indicators are quite often used together.
They are some of the more common indicators, although again, price action will be the main.
Trigger, so you'll learn more about that later on the right candlestick at the right time with these
indicators makes a huge difference, but you do need to have an idea as to what the histogram means.
The slope of the moving average, the average price is falling over the last 50 candlesticks, etc.,
and gives you an idea of which direction on the market you want to be in.