Should You Use Simple Or Exponential Moving Averages?
I talked about Medicines
Company (MDCO) in Nightly Daytraders Report yesterday.
Medicines Company (MDCO):
The stock failed to take out the 50-day MA. Short below today’s low (24.65), and
our target is the October 14 low (22.27). Also consider taking a partial profit
at the 20-day MA. Set a stop just above today’s high (25.34).
Shortly after 10:00 AM, the stock slipped below 24.65 and a sell was triggered.
But only a few minutes later MDCO began to recover. Why at this price? If you
follow the 20-day EMA (exponential moving average), you got the answer. MDCO has
its 20-day EMA near 24.38, and it happened to be very close to today’s low.
MDCO’s 20-day simple moving average is near 24.04. Â
Some traders oppose it, but it helps to check both simple and exponential moving
averages.
Have a good afternoon session.
If you have questions, feel free to mail them to me.