What is a **moving average ribbon**?

A moving average ribbon is a **series of moving averages of different lengths** plotted on a chart.

The basic idea behind the concept of “moving average ribbons” is that instead of using one or two moving averages on a chart, you are using a *bunch* of moving averages, usually between 6 to 16 moving averages (or more).

All on the same chart.

Let’s take a look at an example…

Traders can determine the strength of a trend by looking at the smoothness of the ribbon, as well as identify key areas of support or resistance by looking at the price in relation to the ribbon.

A common question is “How many moving averages do I use?”

It really depends on the trader.

Some traders like to use **six to eight** simple moving averages (SMA) set at 10-period intervals, such as the 10, 20, 30, 40, 50 and 60-day SMAs.

Other traders like to set up with SIXTEEN (or more) simple moving averages varying from a 50-day to a 200-day SMA and everything in between.

The argument for using longer-term MAs is that it gives a more accurate look at the overall trend.

Then other traders like to use **exponential moving averages** instead of simple moving averages.

So it’s really a matter of preference.

The responsiveness of the moving average ribbon can be adjusted by:

- Changing the
**number of time periods**used in the moving average - Changing the
**type of moving average**from a simple moving average (SMA) to an exponential moving average (EMA)

The shorter the number of periods used when selecting which MAs to add on your chart, the more sensitive the moving average ribbon is to slight price changes.

Using moving averages with larger numbers of periods (like 200) are less sensitive and smoother.

When the moving averages start widening out and separating, also known as ribbon “expansion”, this signals that that recent price direction has reached an extreme and could be the end of a trend.

Think of each moving average as a magnet and they’re attracted to each other.

They do not want to be too far apart from each other for too long. So when they are, they will want to close that distance.

When the moving averages start to converge and get closer to each other, also known as ribbon “contraction”, a trend change has possibly started.

After an extreme move in price in one direction, you will notice shorter-term moving averages converge first. The longer-term moving averages will slowly converge.

When the moving average ribbons are parallel and evenly spaced, this means that the current trend is strong.

All the moving averages are in “agreement” since they are moving together.

Some traders make the mistake of only paying attention when the moving averages “cross over” or “twist”.

While it is important to monitor when the short-term moving averages cross above (or below) the long-term moving averages, it’s also important to monitor the SPACING between the moving averages.

The **positioning** of short-term moving averages relative to long-term moving average shows the DIRECTION of the trend (down, neutral, up).

The **spacing** between the moving averages shows the STRENGTH of the trend (weak, neutral, strong).

Let’s take a look at a moving average ribbon applied to GBP/USD on a 1-hour chart.

Can you see the trend changes?

In the chart above, you can easily identify bullish or bearish trends by looking at when the moving averages start to cross over or “twist” lower or higher.

**Ribbon expansion** or the widening of spacing between the moving averages suggests end of the current trend.

**Ribbon contraction** or the narrowing of spacing between the moving averages suggests the start of a new trend.

Lesson 6: What is a Japanese Candlestick? Lesson 7 :Japanese Candlestick Anatomy Lesson 8:Basic Japanese Candlestick Patterns Lesson 9: Single Candlestick Patterns Lesson 10: Dual Candlestick Patterns Lesson 11: Triple Candlestick Patterns Lesson 12:Japanese Candlestick Cheat Sheet Lesson 13: Candlesticks with Support and Resistance Lesson 14: Common Mistakes That New Traders Make With Japanese Candlesticks Lesson 15: Summary: Japanese Candlesticks

Lesson 16 : Fibonacci Trading Lesson 17: How to Use Fibonacci Retracements Lesson 18: Fibonacci Retracements are NOT Foolproof Lesson 19: How to Use Fibonacci Retracement with Support and Resistance Lesson 20: How to Use Fibonacci Retracement with Trend Lines Lesson 21: How to Use Fibonacci Retracement with Japanese Candlesticks Lesson 22: How to Use Fibonacci Extensions to Know When to Take Profit Lesson 23: How to Use Fibonacci to Place Your Stop so You Lose Less Money Lesson 24: Summary: Fibonacci Trading

Lesson 25: What Are Moving Averages? Lesson 26: Simple Moving Average (SMA) Explained Lesson 27: Exponential Moving Average (EMA) Explained Lesson 28: Simple vs. Exponential Moving Averages Lesson 29: How to Use Moving Averages to Find the Trend Lesson 30: How to Use Moving Average Crossovers to Enter Trades Lesson 31: How to Use Moving Averages as Dynamic Support and Resistance Levels Lesson 32: How to Use Moving Average Envelopes Lesson 33: How to Analyze Trends With Moving Average Ribbons Lesson 34: How to Trend Trade with Guppy Multiple Moving Average (GMMA) Lesson 35: Summary: Using Moving Averages

Lesson 36: How to Use Bollinger Bands Lesson 38: How to Use the MACD Indicator Lesson 37: How to Use Keltner Channels Lesson 39: How to Use Parabolic SAR Lesson 40: How to Use the Stochastic Indicator Lesson 41: How to Use RSI (Relative Strength Index) Lesson 42: How to Use Williams %R (Williams Percent Range) Lesson 43: How to Use ADX (Average Directional Index) Lesson 44: Ichimoku Kinko Hyo Lesson 45: Trading with Multiple Chart Indicators Lesson 46: What is the Best Technical Indicator in Forex? Lesson 47: Summary: Popular Chart Indicators