The 3 moving average crossover indicator uses 3 moving averages of different time lengths to create signals on a chart. The default three moving averages used are the 10-day MA, 20-day MA, and 40 day MA. You can change the moving average types (to sma, ema, weighted average, etc) and the periods from the indicator input tab as you wish.
- 10-day MA is the faster period
- 20-day MA is the medium period
- 40-day MA is the slower period.
Indicator signals:
A buy crossover signals appear once the faster period crosses up the medium period MA and the faster period crosses up the slower period MA.
A sell crossover signals appear once the faster period crosses down the medium period MA and the faster period crosses down the slower period MA.
How to trade the indicator:
When the slower period MA is above both the faster period and medium period the chart can be considered to have lost short-term momentum, if the price falls below the slower period MA then that is a signal that the longer-term uptrend is reversing into a possible downtrend. If the price is under all 3 moving averages is a strong confluence showing both a downtrend and falling momentum in all 3 time frames.
- The faster period MA crossing over the medium period MA above the slower period MA is a potential long entry signal.
- The faster period MA crossing below the medium period MA below the slower period MA is a possible short selling signal.
- The faster period MA crossing over the medium period MA below the slower period MA can be a potential signal of a reversal in the longer term trend from down to back to an uptrend.
- The faster period MA crossing below the medium period MA above the slower period MA can be a potential signal of a reversal in the longer term trend from up to the beginning of a new downswing in price.
This is a MetaTrader 4 (MT4) indicator and works with all currency pairs and all timeframes. Once you download and install the indicator, it will appear in your trading chart, like the image shown above.
