well remember that's the nature of long term MA systems, when
any type of long term set of MA's cross (such as a 50/200 day EMA
or a 13/34 week EMA), the market is always overbought or oversld at
that time in respect to the short term. One popular cross is
the 13/34 weekly EMA's on the SPX, however when they have a
negative cross, the market is always oversold on the daily charts
and due for a bounce, when it crosses on the positive side, the
market is overbought on the daily short term charts and due for a
pullback. That's why I always tell people to not trade those
long term MA cross systems when they first occur and instead wait
for the daily charts to work off their overbought/oversold
conditions first, or get a confirmation i.e. when all the long term
MA cross systems crosses and went negative last month, the market
was oversold and due for a bounce.
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well remember that's the nature
Interesting take on the death cross
Posted by matt on 31st of Aug 2011 at 09:30 am
well remember that's the nature of long term MA systems, when any type of long term set of MA's cross (such as a 50/200 day EMA or a 13/34 week EMA), the market is always overbought or oversld at that time in respect to the short term. One popular cross is the 13/34 weekly EMA's on the SPX, however when they have a negative cross, the market is always oversold on the daily charts and due for a bounce, when it crosses on the positive side, the market is overbought on the daily short term charts and due for a pullback. That's why I always tell people to not trade those long term MA cross systems when they first occur and instead wait for the daily charts to work off their overbought/oversold conditions first, or get a confirmation i.e. when all the long term MA cross systems crosses and went negative last month, the market was oversold and due for a bounce.