Moving Average Ribbon

Moving Average Ribbon is a technique used in technical analysis to identify changing trends. The Moving Average Ribbon indicator is created by placing a large number of moving averages onto the same chart.

Moving Average Ribbons

Moving Average Ribbons is a technique used in technical analysis to identify changing trends.

 


Moving Average Ribbons Interpretation

The Moving Average Ribbons indicator is created by placing a large number of moving averages onto the same chart. When all the averages are moving in the same direction, the trend is said to be strong. Reversals are confirmed when the averages crossover and head in the opposite direction.

Moving Average Ribbons Chart

Moving Average Ribbons Chart



Many people assume that the important factor is the “crossover” in the moving averages. While this is important it’s not the best use of this indicator.

From optionalpha:

" The actual spacing of the ribbons and MA’s show the underlying strength of the trend."

1) When ribbons are more parallel and evenly spaced, the trend is strong

2) When the ribbons start widening out and separating, the market is reaching an extreme and the law of probabilities suggest a change of trend

3) When the ribbons start to converge on each other, a trend change has already begun to occur.

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