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GUPPY MULTIPLE MOVING AVERAGE ™

This indicator was developed by Daryl Guppy. It is fully explained in TREND TRADING. Captures the inferred behaviour of traders and investors by using two groups of averages. Uses fractal repetition to identify points of agreement and disagreement which precede significant trend changes.

 

APPLICATION

Applied to understand the nature and character of the trend. Used to assess the degree and extent of trading activity. Excessive trading activity can destabilise strong trends. Trend analysis enables more effective selection of appropriate trading strategies such as breakout, trend continuation etc. Can be applied to long side and short side trading. Can be applied to intraday trading. Also used for longer term investment style analysis.

 

TACTICS

Join established trends at points of price weakness

Join established trends breaking to new highs

Trade breakouts using rally dips and rebounds

Trade downtrend rallies as rallies rather than trend breaks

Recognise trend breaks as they develop

 

RULES

Degree and nature of separation in the long term group define trend strength and weakness

Degree and nature of separation in the short term group define the nature of trading activity.

Degree and nature of separation between the two groups of moving averages define the character of the trend.

Compression shows agreement on price and value.

Compression of both groups at the same time indicate major re-evaluation of stock and potential for a trend change

Trade in the direction of the long term group of averages

The relationships between the groups provide the necessary information about the nature and character of the trend.

Do not use as a moving average crossover tool

 

ADVANTAGES

Enables effective analysis of the trend environment

Improves selection of the appropriate trading tactics 

Better understanding of trend strength

Effective evaluation of unusual price movements, such as dips and spikes

Effective understanding of trading activity and behaviour

 

DISADVANTAGES

Not effectively applied to  trend less stocks

Cannot be applied to all trending stocks

Do not use as a moving average crossover signal

 

See how some FX traders are using the GMMA

http://www.forexfactory.com/showthread.php?t=5933 

http://www.forexfactory.com/showthread.php?t=8742 

http://www.forexfactory.com/showthread.php?t=27574 

http://www.forexfactory.com/showthread.php?t=10877 

http://www.forexfactory.com/showthread.php?t=10448