Trading with the 20 & 100 Simple Moving Averages (SMA)

The Simple Moving Average (SMA) is a powerful trend-following tool that helps traders identify buy and sell opportunities. In this chart, we use:

SMA 20 (Purple Line) → This moving average represents the average price of the last 20 candles. Since it reacts quickly to price changes, it reflects short-term momentum and helps identify early trend shifts.
SMA 100 (White Line) → The 100-period SMA smooths out price action over a longer timeframe, reducing noise and showing the overall market direction.

Trading Strategy: The Golden & Death Cross
✅ BUY Signal: The SMA 20 crosses above the SMA 100 → This is called a Golden Cross, and it indicates that recent prices are rising faster than the long-term trend, suggesting a shift toward bullish momentum. Traders see this as a buying opportunity since short-term demand is increasing

❌SELL Signal: The SMA 20 crosses below the SMA 100 → This is called a Death Cross, and it shows that recent prices are dropping below the long-term trend, signaling a potential bearish market shift. This suggests that sellers are taking control, increasing the likelihood of a downtrend.

By using moving averages, traders can filter out market noise and trade with confidence.