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2 MA Ratio Can Help with Moving Averages

Many technical analysts use moving average crosses to assess trend changes. A faster-moving MA crossing above a slower-moving line may be viewed as a bullish signal. The opposite can apply to the downside.

While these methods may help analyze price direction, they can often force traders to wait until the cross occurs. Sometimes it may be useful to anticipate the event – or at least know it’s getting close.

That’s where the custom script 2 MA Ratio can be useful because it tracks the fast and slow moving averages. The fast MA is then shown as a percent of the slow MA. Positive readings indicate a bullish condition and vice versa for the negative.

It’s also color-coded to clearly illustrate when the crosses occur.

2 MA Ratio can handle simple moving averages ( SMAs ) and exponential moving averages (EMAs). It even lets you compare SMAs to EMAs. Users can choose between using open, high, low or closing prices as the inputs. (It defaults to Close.)

The chart above shows the short-term pair of the 8- and 21-day EMAs on Tesla ( TSLA ). The second chart below shows the same stock with the slower 50- and 200-day SMAs . Notice the “Golden Cross” last summer and the “Death Cross” in May:

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