Dec. 8 at 4:18 PM
$AAPL This is how I use certain moving averages as safety nets.
My entry was 10/17 when this moved into positive momentum and was supported by other technicals. Positive momentum, for me, is when the 5-day EMA (green line) crosses above the 10-day SMA (yellow line). That's when I start to look for an entry. Once I take an entry, I know, as long as the 5-day EMA trends above the 10-day SMA, momentum is on my side. If you follow the green line in conjunction with the yellow line, you will see what I mean.
Now, a sell watch would be when that reverses, the 5-day EMA trends below the 10-day SMA. Once that happens, I look to see whether it's a sell signal.
You can see in that circle when the 5-day EMA crossed below the 10-day. Was that a sell signal? No, because right below it is the 21-day (orange line), also known as the pivot moving average. I know that is a safety net for the trend. The trend will either pivot below the 21, breaking the trend, or will pivot off it and the trend will continue. As you can see, it tested the 21 four times, and pivoted back up, saving me from exiting a winning trend, providing a safety net.
Now I closed my position because it is moving into negative momentum and yes, the 21 is below, but its a bit further below so if it does the same thing, I will most likely get back in at a few dollars less of an entry. Just one way to look at a trade. If you are long, you probably like this action. Happy Monday
