Guppy Multiple Moving Average - GMMA

DEFINITION of 'Guppy Multiple Moving Average - GMMA'

An indicator used in technical analysis to identify changing trends. The technique consists of combining two groups of moving averages with differing time periods.

One set of moving averages in the Guppy multiple moving average (GMMA) has a relatively brief time frame and is used to determine the activity of short-term traders. The number of days used in the set of short-term averages is usually 3, 5, 8, 10, 12 or 15.

The other group of averages is created with extended time periods and is used to gauge the activity of long-term investors. The long-term averages usually use periods of 30, 35, 40, 45, 50 or 60 days.

BREAKING DOWN 'Guppy Multiple Moving Average - GMMA'

The relationship between the two sets of moving averages is used by traders to determine if the outlook of short-term traders aligns with investors who have a longer-term outlook.

Changing trends are identified when the two groups of moving averages intersect. A bullish trend is present when the short-term moving averages are above the long-term averages. Conversely, a bearish trend occurs when the short-term averages are below the long-term averages.

This term gets its name from Daryl Guppy, an Australian trader who is credited with its development.