5,10,20 SMA (simple moving averages) used for entry/exit decision assistance.
When the 5 is above the 10 and the 10 is above the 20 it indicates you should be in the stock. They are lined up in order 5,10,20 on bottom. Reverse and with 20,10,5 on bottom and you should be out of the stock.
Thus crosses present entry and exit indications, that one can use for decisions, along with other TA indicators as support.
When the 5 crosses below the 10, that is an early exit signal. When the 10 crosses below the 20, that is a confirmed exit signal. 5 crossing above 10 early entry. 10 crossing above 20 confirmed entry signal.
This works well with a 3 month chart look. If your nailing down your decision to a 1 month chart, you can use 2,4,8 sma's to zero in better. And if your looking long on 6 month for investing more the swing trading keep them 5,10,20 but change to expediential moving averages from simple. This rounds out the moving average to present a better result.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.