Plz explain me this in simple words.
Technical Analysis is like Alternate Medicine. Not always effective but when it is it goes beyond what a scientific mind could fathom. There are 3 aspects of TA that form the cornerstone:
Momentum
Trend
Volatility MTV in short
A technical analyst is not concerned ( or say less concerned ) with “Why”? but surely is interested in “Where”. Moving average ( MA) is one simple yet a very powerful tool( indicator) among 100 others. And with any MA, the basic premises is if the short term MA ( say a 50 Day MA), crosses from below and move upwards a 200 Day MA, it often ensues an upward trend and a strong momentum ( often with huge spike in trading volume). Hence this serves as a strong indicator called a “Golden Cross”. The exact opposite I. E. a 50 Day MA crossing the 200 Day MA from above moves downward ensues a strong downtrend. This is called the “Death Cross”.
It is to be noted what a 50 Day and a 200 Day relationship holds the same relationship may be found in shorter time frames. A 20 day MA May cross from below a 50 day MA from below to herald a super bullish uptrend. A crossover of 9 DMA and 20 DMA can also tell the same trend commencement.
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