In strong trends, price often pulls back to a moving average, bounces, and keeps going. The MA acts as dynamic support (or resistance in a downtrend).
The trend filter
One of the simplest rules in trading: only buy above the long-term MA, only sell below it.
Wick says
This one rule stops you fighting the trend. Fighting the trend is like swimming upstream: possible, but exhausting.
Pro tip
Different markets respect different MAs. Scroll back on your pair and see whether pullbacks tend to hold the 20, the 50 or neither.
Key takeaways
- Trending markets often bounce off the 20 or 50 MA.
- Use a long MA (like the 200) as a direction filter.
- Combine MA bounces with candle signals for entries.