Sunday, July 30, 2006

EMA 90 What A Tight Rope

Many traders myself included use the simple moving average which is probably a mistake. Here is a figure of the DIA with both the SMA 90 and the EMA 90 overlaid. Note how the DIA has been on the 90 day EMA and only recently the 90 SMA joined the mix.

The lesson - sometimes the SMA tells the story but the EMA always tells the story.

The second lesson, of course, is that the DIA (and INDU you can look it up) seems to use the 90 day EMA as a support area.

The figure comes from A super site for very sophisticated charting software. If you don't use the site you are foolish.

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