Moving Average Ribbon Definition

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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 thesame direction, thetrend is said to be strong.Reversals are confirmed when the averages crossover and head in the opposite direction. The moving averages used in the diagram start with the 50-day moving average andincrease by 10-day periods up to the final average of 200. (50, 60, 70, 80 . 190, 200)Responsiveness to changing conditions is accounted forbychanging the number oftimeperiods usedin the moving averages. The shorter thenumber 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 abetter choiceto find short-term reversals then 150, 160, 170, 180-day moving averages.

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