THE MOVING AVERAGE CROSSOVER STRATEGY: A STUDY

A moving average is an indicator used in Technical Analysis to understand the strength and direction of the movement in prices. Moving averages are used to analyze Trend of the market/ stock. Moving averages are used to alert, to confirm and to forecast movement in prices in future. The study is restricted to the Nifty 50 Index for the period 1st January 2020 to 31st May 2020. The study covers only 5 day EMA, 13 day EMA and 26 day EMA and the crossover of 5 day EMA, 13 day EMA and 26 day EMA strategy to buy or short sell. The study concludes that traders can use the Moving Average crossover Strategy to understand the trend of the market / stocks. The Moving Average Crossover Strategy can be used by traders for short term trading in a trending market. When applied to the Nifty 50 Index chart in this study the strategy was successful.

 

KEYWORDS: Technical Analysis, Indicators, Simple Moving Average, Exponential Moving Average.


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