Originally posted by egildone
ema's work for the same reason most indicators (fib levels, Bollinger bands, rsi, etc) work and that is that lots of people are watching them and they become selffulfilling...
Ed
Wow, forgot about this thread until Don B (or i guess egildone) brought it back up. This site is like a black hole, you try and get away from it and think you've reached escape velocity and then you get an automatic email and shoop, you are sucked back in.
Egildone I disagree. While your statement is partly true i think it is more false than accurate. EMA's- or simple averages too for that matter- have value above and beyond their self fulfilling prophecy effect. They would be useful if no one looked at them but me (that would be kind of cool actually).
The moving average is a clear and simple way to determine the relative strength or weakness of a market in comparison to past activity or to another market.
99% of all those other indicators- Bbands, RSI, stochastics, MACD, ADX, blah blah blah blah BLAH....are nothing more than fancy alternative ways to interpret straight up price action. Since you can train your eyes to interpret straight up price action, all this other stuff is a useless crutch once you've learned how to see. The moving average is actually useful because it visually applies a picture of the past in a way that your eyes can't see at a glance.
Candlesticks, moving averages (of either variety), volume and volatility are pretty much all that one needs to trade and all that really has true relevance, in my opinion- all other indicators can be thrown over the side. (And yes, it is just an opinion, before someone starts throwing rotten tomatoes at my head.)
