Page 71 - Ultimate Guide to Currency Trading

50-day and the 200-day moving average cross, the direction of the EUR/CHF pair is changing direction,
and that new direction should continue for a length of time.

You can see in this example the theory holds true: the direction change is indicated by the
crossing of the two moving averages, the 50- and the 200-day moving averages. At the end of the
chart, you can see that the 50-and the 200-day moving averages are beginning to converge again. If
you allow you chart to be "live" and set the 50- and 200-day to move along with the chart as time
progresses, you will eventually see when the 50- and 200-day moving averages converge once again.
When this happens, it would be a good time to consult your fundamental information (brokers'
reports,

A one-hour chart showing the EUR/CHF pair.

economics, interest rate expectations, etc.) to reconsider changing the direction of your bets. If the
fundamentals reconfirm it, and the technical indicator of the 50-day and 200 day-indicators are also
telling that same tale, together you have what can be a very strong signal that the direction of your
currency pair is changing. The direction of the currency pair might change for only a few days, but as
you know, all it takes is a few days of movement to make a week's worth of salary trading currencies.

Once you have noticed the establishment of a crossover point between the 200-day and
50-day moving averages, you can back up your observations by looking for crossover
points between a 100-day moving average and a 20-day moving average. If they tell the

Essential same story, you are in luck! A trend is definitely developing.