Okay, so moving average again. So how can you use moving average to define an area of value? So here's how so in trending markets, for example, in an uptrend, a moving average can act as an area of value. It will look something like this. So, let's say market is in an uptrend.

Higher makes a pullback another high pullback another high pullback another high. When, when you overlay with a moving average, let's say the 50 period moving average, you would realize that the price right has bounced off the moving average. A number of times you know once twice three times and if you come back for a fourth time, okay, we can say that you know hey. This is an area of value, and this is where buying pressure could step in and push the price up higher so which moving average do we use.

We have you know one to one thousand for me personally, i like to use the 50 period moving average because for 50 period moving average the trend usually tends to be a healthy trend where you can see the app and flow of the trends very clearly here You can see the pullback, it's not very shallow. It's not very deep to me. It's just just nice right, the sweet spot. Of course you don't have to use the 50 period moving average.

Some people prefer shallower pullback than they use the 20 period moving average. Some people prefer, you know, a deeper pullback. They use the 100 period moving average. So there are, you know, different types of moving average.

You can use. Ultimately right. You have to find right the type of trends that you want to trade. You might be wondering but rain.

How do i know whether you know the moving average holds up? You know. Sometimes i look at different charts. You know the price just sliced and dies through the moving average right. It doesn't respect it.

I get it so. This is why, before we use moving average as an area of value, we want to make sure that the price you know respects the moving average and we use this two tests right to confirm it. So let me explain so: let's say market is in an uptrend. It makes a pullback goes up, makes a pullback and then goes up and you overlay with a moving average.

It has to be tested at least twice. So this is one test, and this is the second test. So this way, if the market comes back for a third time all right, i know that hey, you know this market seems to be respecting this moving average. I have more confidence right to use the moving average to define my area of value having you know proven itself two times previously, so this is what i mean by you know at least two tests to confirm it.

So let me walk you through some charts, so you know what i mean so you can see over here. This is brand crude oil. Over here we have one test price test of moving average. Once then, it breaks above this swing high tested.

A second time breaks out above this swing high and then tested here a third time. Okay, so we have three tests over here. So this means, if in future, maybe for a fourth time, the price comes back to this 50 period. Moving average, i can say hey, you know, this is an area of value for this particular market and on this time frame i can look for buying opportunities at this 50 period moving average, since it's acting as an area of value, okay and then in this case Right yep, it did came back and you know tested uh.

I would say a fourth time over here. So now some of you might be thinking rain. Why isn't this a fourth test and that's a good question and the reason is because for me to define a test, the price must break. Above you know the swing high or the swing low.

So, in this case this was already already the third test, but the price when he tested here it did not break out this swing high over here. So i don't consider this a fourth test. The price has to break out of this swing high. Only then, when he breaks out of it and re-test, would i consider it a test? Okay, so that's the way i define my test dollar against the japanese yen same thing.

If you look at this price tested once bounced up tested twice, heads up higher came back a third time. We have three tests over here so again on this market and on this time frame dollar against the japanese yen eight hour time frame, i would say that hey the 50 period moving average right is acting as an area of value. I can look for buying opportunities if the market pulls back towards the 50 period, moving moving average, since you know it's respecting it. In this case i tested a fourth time and then just collapse and break down aussie against the japanese yen.

So let's have a look at this and see if there's any uh tests so over here we have one test: price breaks out of the swing high second test price breaks out of this swing. High came back. A third test then start to chop chop chop chop. It hits higher, but eventually i think you saw what happened right.

Oh yeah, he hates higher. So that's how you kind of define the test and uh use it to serve as an area of value and just one. Last final example. Example, you can see over here.

The dollar against the chinese union - you don't have to use the 50 period moving average for this one over here. You can see that the 20 period moving average can serve as an area of value as well. So we can see one test. It's down lower.

Second, test hit down lower third test, hit down lower and there's enough. Fourth, one over here - and you know fifth and so on. So one thing to point out is that when you see this chart, that is a respecting the 20 period moving average. If you look at the depth of the pullback, this one is much shallower compared to the 50 period moving average.

If you look at the depth of the pullback, it's usually quite shallow, quite shallow, compared to the 50 period moving average one like on the let's say the dollar yen eight hour, you can see that the depth of the pullback is much uh deeper right. This one. You can see it's much deeper, deeper and much deeper, so this right gives you more time right. If the depth of the pullback is, i would say longer in this case of the 50 period moving average, you have more time to plan your entry right compared to a 20 period, moving average, where you know you need to scramble and act fast.

So this is why i prefer, using the 50 period moving average to define right, uh the area of value in trending markets. Okay, let's do a quick recap to what you've just learned number one area of value helps you to decide where to buy or sell. You know exactly where, on a chart right, you can look for buying opportunities where, on the chart, exactly you can look for selling opportunities and to accomplish that, i share with you a couple of tools and techniques. You can use support and resistance or moving average right to help.

You identify your area of value and in fact, you can actually use both as well support and resistance and moving average to define your area of value. Okay, i'll cover more later on. So that's what? If you know we've just covered so at this point right, you know market structure right tells you know what to do, whether to be looking for buying opportunities, selling opportunities or to stay out of the markets. Then we have talked about aerial value where to buy where to sell.

Now. The next question is: when exactly do you buy or sell? When is the right time to click the buy button when right? That's where we will, you know, talk more about it in the next section, which is called entry trigger. You.