Frequently Asked Questions

Market Lab Report
The 6/20 moving averages

The 620 is shorthand for 6 day exponential moving average and 20 day simple moving average on a 5-minute bar chart. It is an intraday trading guide that can help one enter stocks that are pulling back constructively, though a volume dry up pattern where the stock starts to trade in a tight range on lower volume near support is also a good clue that the stock may be setting up to move higher, so if one cannot watch their stocks during the day, these daily patterns also work well. We have discussed this in some detail in a number of our webinars.

The 620 can also be used on buyable gap ups. When a stock gaps higher at the open and qualifies as a buyable gap up, buying at the open carries the risk that the stock may move lower and close the gap, thus invalidating the BGU pattern. If one buys at the open, one would be stopped out at a loss. The 6/20 moving averages can be used as a guide to prevent one from buying the stock prematurely. Later in the day, when the 6 day crosses back above the 20 day, the stock can then be bought. 

Published: Aug 9 2016