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Chapter 9. Moving Average Trading Channels: Using Yesterday’s Action to Call...

Chapter 9. Moving Average Trading Channels: Using Yesterday’s Action to Call Tomorrow’s Turns

I trust that you are finding this guide to technical analysis both useful and helpful. My staff and I employ the tools we have discussed each day as we make trading and investment decisions. In this chapter, you will learn what I consider to be among the most practical of the practical power tools in our decision-making arsenal: the moving average trading channel. Like the MACD, another of our favorite practical power tools, the moving average trading channel can be employed in virtually any timeframe, its application extending from day trading to long-term investment.

As usual, this chapter works through how to construct the necessary data and charts into an array of concepts and rules for interpreting the chart patterns observed. The underlying concepts are actually quite straightforward, very much in keeping with concepts already discussed in this book. There are elements of subjectivity, of course, in the analysis of moving average trading channels. Chart reading, unlike statistically based timing models, often involve somewhat subjective judgment—but in the case of moving average trading channels, the subjective elements are frequently well-informed. Along with the MACD, the moving average trading channel (or band) is a technical tool I respect highly.


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