Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It only takes a minute to sign up.
Sign up to join this community
I wonder if there is any strategy to buy and sell stocks based on the SMA (Low) and SMA (High) of two days. I have noticed that the greater range price remains between the low of the previous day and the high of the actual day and that price action always test SMA 2 High and SMA 2 Low. The main question is how to properly operate this signals. Thanks in advance.
Buy and sell signals:
A two day simple moving average of consecutive data points simply averages the two data points and its graph will be 1/2 way between the two numbers.
If today's low is less than yesterday's low, today's low will always penetrate the 2 day SMA of the low or SMA2(low). If today's low is more than yesterday's low, today's low will always be above the SMA2(low). The same holds true for SMA2(high) but in the opposite direction.
They aren't signals. They're just a one day removed smoothed derivative of connecting all the highs and connecting all of the lows.
