WEBVTT 00:03.210 --> 00:10.620 In this video, we're taking a look at how to identify market trends, we'll be using the exponential 00:10.620 --> 00:18.660 moving average and the makdisi, the exponential moving average is a indicator the plots, the average 00:18.660 --> 00:22.110 price of a security over in. 00:23.380 --> 00:25.420 Periods you can select. 00:25.560 --> 00:28.580 So, for example, if it's 20 and I'm on this chart, I'd be 20 days. 00:28.600 --> 00:34.300 It would give you the average price over the last 20 days that each candle close and it will just move 00:34.300 --> 00:35.700 up and down right along with it. 00:35.710 --> 00:39.610 The idea, of course, is that if it's rising, we're in an uptrend. 00:41.180 --> 00:43.080 If it's falling, we're in a downtrend. 00:43.910 --> 00:48.180 There are a multitude of moving averages that people use. 00:48.230 --> 00:49.490 They are a guide stick. 00:49.490 --> 00:51.920 I would not use them for much more than that. 00:52.730 --> 00:56.480 And the Makdisi is an indicator that has. 00:58.900 --> 00:59.530 The. 01:01.410 --> 01:06.990 Moving average convergence divergence is actually what it's called, and you can see it's got moving 01:06.990 --> 01:12.180 averages a quicker and a slower one, and then a histogram measures the difference between the two. 01:12.660 --> 01:15.000 It turns on trading view, it turns green. 01:15.000 --> 01:19.400 If it goes positive and it goes negative, it turns red. 01:19.980 --> 01:23.310 Both of these can be used to show. 01:25.180 --> 01:32.290 The trend or perhaps the overall attitude of the market, if you like. 01:33.370 --> 01:38.880 And you can see that there's the moving average it places on top of the chart, you can change it. 01:40.190 --> 01:41.090 By clicking this. 01:42.210 --> 01:48.300 So let's go ahead and do the 50, because the 50 day Emma tends to be widely followed, you can see 01:48.300 --> 01:49.520 that it is sloping up. 01:49.530 --> 01:52.920 So that tells you the trend we have been gaining over time. 01:53.950 --> 02:00.640 With the D, you can see that the histogram has been green this entire time, with the exception of 02:00.640 --> 02:04.890 a couple little moves, this area here, it went red. 02:04.900 --> 02:08.710 So the trend definitely was dropping, but the longer term trend was still higher. 02:09.010 --> 02:12.730 So this shows you a little bit of a confluence of. 02:13.610 --> 02:19.870 A pullback in a longer term trend, I would not classify that as a negative trend or simply a pullback, 02:19.880 --> 02:21.410 it's something that you typically get. 02:22.660 --> 02:28.990 You can see that the histogram in the makdisi had gotten lower as we had risen. 02:29.950 --> 02:36.730 That shows that we are losing momentum and that was the first sign of trouble and then the low had gotten 02:36.730 --> 02:40.230 lower, so that shows that the sellers are starting to become more aggressive. 02:41.510 --> 02:46.640 There's a lot of different ways you can use these indicators, and they are some of the more common 02:46.640 --> 02:47.570 ones that you'll see. 02:48.110 --> 02:52.400 Another thing that people will pay attention to is moving average crossover. 02:52.580 --> 02:59.060 So when the quicker one crosses over the lower one underneath, that's when you may start to see a little 02:59.060 --> 03:00.200 bit of momentum pick up. 03:00.200 --> 03:02.990 And we did to a point wasn't the greatest signal. 03:04.180 --> 03:09.550 But the most simple way to use this is to simply pay attention to the histogram, whatever side of the 03:09.550 --> 03:15.030 zero signal line we are on tells you what the mode of the market is, the momentum. 03:15.520 --> 03:19.750 And then, of course, if you use it with a moving average, like the 50 day, it can keep you on the 03:19.750 --> 03:20.890 right side of the market. 03:20.900 --> 03:25.360 So even though this was negative, the 50 day was still relatively bullish. 03:25.360 --> 03:29.310 We did flatten out a little bit, but we hadn't rolled over to the downside. 03:29.980 --> 03:31.510 So you would have known not the short. 03:32.470 --> 03:37.180 You can see that we went higher and again, like I said, we got a little bit of divergence, lower 03:37.180 --> 03:43.540 momentum to the upside on the next tie, and then you started to see the histogram go red and it went 03:43.540 --> 03:44.320 really red. 03:44.470 --> 03:46.420 The FEMA started to drop. 03:46.420 --> 03:49.810 And that's a sign that we're entering the downtrend. 03:51.050 --> 03:54.380 I'll go ahead and put these indicators back on. 03:58.000 --> 04:03.940 This chart here and I will use the same settings. 04:05.520 --> 04:07.820 Just to show you how it how it works. 04:09.150 --> 04:14.760 OK, so this is your moving average convergence divergence indicator, just as we saw in the last time 04:15.330 --> 04:18.480 and this setting here, I will change to 50 days again. 04:20.470 --> 04:26.350 You can see that the indicator gets a little flat here and you'll see that when you're consolidating, 04:26.350 --> 04:33.370 but then we make a decidedly negative move, it lines up with the histogram right here going very red 04:33.370 --> 04:34.210 all of the sudden. 04:34.630 --> 04:37.870 And that shows you which direction we're going in. 04:38.230 --> 04:39.580 Doesn't have a lot of momentum. 04:39.590 --> 04:41.890 It's a very gentle downward. 04:42.930 --> 04:48.390 Move as the histogram is fairly weak, we got a nice little pop here and we did break the moving average, 04:48.960 --> 04:51.170 but the moving average hadn't turned up yet. 04:51.180 --> 04:54.030 So this just shows you that we've had a nice retrace. 04:54.390 --> 04:59.400 And once we break down below there, the red picks back up and we start to fall with a little bit more 04:59.400 --> 05:00.000 authority. 05:00.750 --> 05:03.180 These two indicators are quite often used together. 05:03.690 --> 05:09.720 They are some of the more common indicators, although again, price action will be the main. 05:10.590 --> 05:15.780 Trigger, so you'll learn more about that later on the right candlestick at the right time with these 05:15.780 --> 05:21.750 indicators makes a huge difference, but you do need to have an idea as to what the histogram means. 05:22.170 --> 05:28.890 The slope of the moving average, the average price is falling over the last 50 candlesticks, etc., 05:28.890 --> 05:31.560 and gives you an idea of which direction on the market you want to be in.