Based on a brief review in the previous article about what the Triangular Moving Average is, let’s continue our discussion about how to use the Triangular Moving Average.
Here are some tips to use Triangular Moving Average
During Market Trending
In the forex market, prices can move varied; sometimes trending can be strong, but sometimes also ranging (sideways). The impact of news releases, political conditions, and market sentiment can influence this phenomenon.
A strong domination by one of the market players, whether it’s Seller or Buyer, usually can affect the formation of market trending. If the Seller is dominating the market, then the forming trend is Downtrend. While the Uptrend condition can occur when the Buyer’s pressure is greater than the Seller.
In relation to the use of TMA indicators, market trending conditions will be very precise when measured using this indicator.
Capturing Reversal Signals
Although the Triangular Moving Average indicator is very useful when the market is trending, this indicator seems unable to show an overbought and oversold condition. You cannot know exactly when prices will reverse direction with this indicator.
However, the candlestick pattern formed on the chart actually indicates weakening momentum. In such conditions, you might miss a golden opportunity for entry right at the point of the Reversal.
To get overcome this issue, you can use additional tools to confirm the signal. You can use Oscillator indicators such as Relative Strength Index (RSI) or Stochastic Oscillator, which are more capable as a measure of trend strength.
Besides Oscillator assistance, you can also use Price Action. Price Action is the price movement of an asset or a currency pair that refers to technical analysis based on candlestick patterns.
Thus, Is TMA Eligible to use?
Generally, traders only know Moving Average, this indicator apparently has several offspring that can be adjusted.
By using the TMA indicator, you can read trend movements more clearly.
According to The Balance, the purpose of the triangular moving average is to double smooth the price data, which will produce a line on your chart which doesn’t react as quickly as an SMA would. Thus, the risk of various noise or trapped in trading signals during sideways is very small.
Read more: 3 Essentials Trading Tips for New Day Trader