Moving Average Ribbon

DEFINITION of 'Moving Average Ribbon'

A technique used in technical analysis to identify changing trends. It 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 Ribbon



The moving averages used in the diagram start with the 50-day moving average and increase by 10-day periods up to the final average of 200. (50, 60, 70, 80 ... 190, 200)

BREAKING DOWN 'Moving Average Ribbon'

Responsiveness to changing conditions is accounted for by changing the number of time periods used in the moving averages. The shorter the number of periods used to create the average, the more sensitive the ribbon is to slight price changes. For example, a series of 5, 15, 25, 35 and 45-day moving averages will be a better choice to find short-term reversals then 150, 160, 170, 180-day moving averages.

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RELATED FAQS
  1. How do I construct a Moving Ribbon strategy?

    Learn how to construct a moving average ribbon strategy, which plots as many as eight or more moving average lines on a price ... Read Answer >>
  2. What are the most common periods used in creating Moving Average (MA) lines?

    Learn the most commonly selected periods used by traders and market analysts in creating moving averages to overlay as technical ... Read Answer >>
  3. How do I use a Moving Average Ribbon for creating a forex trading strategy?

    Discover what the moving average ribbon is, and learn how it can be implemented to create a breakout trading strategy for ... Read Answer >>
  4. Why is the Moving Average Ribbon strategy important for traders and analysts?

    Take a look at the rationale behind moving average ribbons, and see why traders and chartists use multiple trendlines for ... Read Answer >>
  5. What is a common strategy traders implement when using a Moving Average Ribbon?

    Learn about how traders might use an exponential moving average ribbon strategy and what kinds of buy and sell signals are ... Read Answer >>
  6. What are the main advantages of using Moving Averages (MA)?

    See why moving averages have proven to be advantageous for traders and analysts and useful when applied to price charts and ... Read Answer >>
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