Today we’ll speak about the most trivial, but very useful indicator that’s called . As you know, moving average is a backbone of 90% complicated indicators. It’s able to give lots of information about the price action. Well, let’s speak about it.
The uses two exponential moving averages (EMAs) to eliminate lag, as some traders view lag as a problem. The is used in a similar way to traditional moving averages (MA), but DEMAs react quicker than traditional MAs.
How to use DEMA?
-The average helps confirm uptrends when the price is above the average, and helps confirm downtrends when the price is below the average. When the price crosses the average that may signal a trend change.
-Indicate areas of support or resistance.
-Cross overs of 2 DEMAs. We sometimes draw fast (20) and slow (50). When the fast line crosses the slow below, it’s a signal, when above – . It’s consider to be a good entering signal. However, we shouldn’t forget that the indicator is still lagging.
Guys, I should remember you that every indicator shouldn’t be used in solo. You should only use them in conjunction with other indictor when they confirm each other. I hope, this knowledge will boost your trading skills and make your trading staff more interesting and profitable. Have a nice day, dear traders.