Bull or Bear Market… Doesn’t matter

Kyle Dennis’ new, 5 Min Strategy is poised to double Your Money Weekly!

Michael S. made 173% with Dollar Ace. So can you!


Technical breakdown: Moving-average crossovers

Davis MartinDavis Martin ·

Technical traders often use moving averages as an indication of where a stock is trending or in range. But another way to use moving averages to signal potential trades is by watching for crossovers.

Here’s how they work:

Moving-average crossovers explained

Moving average crossovers are simple ways to find buy and sell signals.

The market generates a buy signal when the short-term moving average crosses above the longer-term moving average. On the other hand, a sell signal is generated when the short-term moving average crosses below the longer-term line.

The time periods used for the moving average — and they can vary from a matter of hours to hundreds of days — dictate the amount of signals that are generated. The shorter the time frame, the more signals you get; with longer time frames, the opposite is true.

Let’s take a look at some examples. Check out the daily chart on Lowe’s Companies (LOW):

Source: TradingView

In the annotated chart above, the 20-day simple moving average clearly crossed above the 50-day simple moving average. Consequently, this was an indication to get long the stock. That in mind, you might have set a profit target thereafter, looking to get out of the position if the 20-day simple moving average crosses below the 50-day simple moving average.

Here’s a look at how the trade would have turned out:

Source: TradingView

Now, let’s look at LOW using short-term simple moving averages.

Source: TradingView

Here, the 5-day and 15-day simple moving averages generated multiple signals; if you followed them to a T, you would’ve gotten chopped up.

The bottom line

Moving-average crossovers can be powerful tools for technical traders. They give you an idea of which direction a stock or ETF might move next. As with nearly all technical strategies and chart patterns, however, you’re getting a hint or an indication, not certainty about what will happen next. Keep that in mind when using them as a factor in your trading decisions.


     Davis Martin is the lead publisher at DailyProfitMachine.com. He trades SPY calls and puts and swing trades mid-large cap stocks and stock options.

You may also like

Exclusive System Tracks Wall St. Insiders

“Dollar Ace Simply Exposes Information That Wall Street Wants To Keep Quiet” Said Kyle Dennis
“One member, Wesley M., has already reported 360%+ gains in just a few short days. Don’t miss this!”
(Reserve Access Now)

“What Recession?!” Jason Bond nets $55,060 in realized profit in One Day

After going 6 for 6 on profitable trades recently, we caught up with Jason to ask how he did it.
Check out Jason’s exclusive interview revealing this tightly guarded strategy. (Watch Now)

RagingBull.com Co-Founder, Jeff Bishop, Launches High Conviction Trade Service

“We listen to our clients and we give them EXACTLY what they want, so we designed a service to deliver 1 trade, 1 time a week, with a 100%+ PROFIT TARGET, directly to your inbox every Monday before the market opens. (Read More)

Be a Better Stock Trader, Starting Today

Get the expert insights, tips and strategies you need to optimize your trading skills and profiles