In this technical event, there are three separate moving averages and the direction of the various crossovers will lead to either a bearish or bullish movement. Firstly, the shorter moving average will cross the medium moving average which, in turn, will cross a longer moving average. In this scenario, 4, 9, and 18 days are used as the time periods. Therefore, the event is said to have ‘started’ when the 4-day crosses the 9-day average. However, it is not confirmed until the 9-day average crosses the 18-day moving average.
If the crossovers occur above the moving averages, this will be considered a bullish signal with the opposite representing a bearish movement. Once again, simple moving averages are used to calculate the crossovers and this is the only type of moving average that is supported. As we have said previously, it should also be noted that it uses historical information and can therefore not be relied upon as an accurate prediction into the future.