This indicator was developed by Daryl Guppy.An indicator used in technical analysis to identify changing trends. The technique consists of combining two groups of moving averages with differing time periods. 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.
Advantages of using Guppy multiple moving average include effective trend analysis, adaptation to a variety of trading tactics (short-term and long term), effective analysis of dips and spikes, and better understanding of trend strength. Disadvantages of GMMA include lesser effectiveness in generating MA crossover signals and it is not suitable for all stocks, especially non-trending stocks.
One set of moving averages in the Guppy Multiple Moving Average (GMMA) has a relatively brief time frame and is used to determine the activity of short-term traders. The number of days used in the set of short-term averages is usually 3, 5, 8, 10, 12 or 15.
The other group of averages is created with extended time periods and is used to gauge the activity of long-term investors. The long-term averages usually use periods of 30, 35, 40, 45, 50 or 60 days.
The relationship between the two sets of moving averages is used by traders to determine if the outlook of short-term traders aligns with investors who have a longer-term outlook.
Changing trends are identified when the two groups of moving averages intersect. A bullish trend is present when the short-term moving averages are above the long-term averages. Conversely, a bearish trend occurs when the short-term averages are below the long-term averages.
I trade forex using Guppy MMA’s and find it is an excellent tool. It is well worth looking at.