Day Trading - Moving Averages vs Support and Resistance
When day trading the SP and Nasdaq futures, do you rely on
your moving averages more than your support & resistant
areas?
During the first hour of trading, the support and resistance
zones on the SP and Nasdaq futures are the most important things
to watch. The moving averages have not yet had a chance to come
into play.
After that, if a trend is developing I watch several key
exponential and simple moving averages on the 2 minute, the 5
minute and the 13 minute SP and Nasdaq futures charts.
These specific moving averages give reliable support and
resistance for the market as long as the slope of the moving
averages are fairly steep, indicating a trend. When there is no
trend, the moving averages are flat and pretty much
worthless.
When a trending market makes a countertrend move, and hits a
key moving average on two or more different time frames at the
same time, the probability of a good trade setup increases
dramatically. If you get three hits at the same time, it's even
better. Sometimes you'll see one key moving average get hit on
the five minute SP chart at the same time another moving average
is hit on the 13 minute Nasdaq chart. This also gives a good
trade setup.
Eventually, a trending market will reach the next major
support or resistance zone. At that point the zones once again
become more important than the moving averages.
In afternoon trading, the market has often broken through a
support or resistance zone several times. In that case, the zone
is no longer useful, and new areas of support and resistance can
usually be found. When I find them, I send my subscribers an RBI
Intraday Update with the new support or resistance areas, and a
description of what I think the market will do if it moves above
or below them.
Mike Reed is author of TradeStalker's RBI Trader's Updates. He
has been trading the Market for 23 years. His support and
resistance numbers have been published on the internet since
1996. Mike's nightly support and resistance zones are specific
and incredibly accurate. He offers an unlimited free trial of his
nightly TradeStalker RBI Trader's Updates. http://www.TradeStalker.com
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