Moving Average Crossover Study

By Samantha Baltodano

TL;DR:

Moving Average Crossover is a technical indicator that occurs when two moving averages of varying lengths cross over one another.

What Is the Moving Average Crossover Study?

Moving Average Crossover is a study that allows investors to find crossovers of moving averages of different types and lengths. Investors may use simple, exponential, weighted, Wilder’s, or Hull moving averages.

The general idea is to combine two moving averages of different lengths: short and long.

The entry and exit points for the moving average crossover are as follows:

• Buy when the short moving average crosses above the long moving average.
• Sell when the long moving average crosses over the short moving average.

Source: DailyFX (2021)

Figure 1: Moving Average Crossover points

Because moving averages are a lagging indicator, the crossover method may not catch the exact peak or trough of a trend. However, it can help traders capture the bulk of a trend.

Summary

• Moving average crossover occurs when two moving averages of different types or length cross over each other.
• Buy when the short moving average crosses over the long moving average.
• Sell when the long moving average crosses over the short moving average.
• The crossover method may not catch the exact top or bottom of a trend due to the lag effect. However, it can help traders capture the bulk of a trend.

Moving Average Crossover Study is just one of many studies that Archaide automates. For a full list of strategies and studies available click here.

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