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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
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Join established trends at points of price
weakness
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Join established trends breaking to new highs
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Trade breakouts using rally dips and rebounds
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Trade downtrend rallies as rallies rather
than trend breaks
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Recognise trend breaks as they develop
RULES
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Degree and nature of separation in the long
term group define trend strength and weakness
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Degree and nature of separation in the short
term group define the nature of trading activity.
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Degree and nature of separation between the
two groups of moving averages define the character of the trend.
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Compression shows agreement on price and
value.
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Compression of both groups at the same time
indicate major re-evaluation of stock and potential for a trend
change
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Trade in the direction of the long term group
of averages
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The relationships between the groups provide
the necessary information about the nature and character of the
trend.
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Do not use as a moving average crossover tool
ADVANTAGES
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Enables effective analysis of the trend
environment
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Improves selection of the appropriate trading
tactics
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Better understanding of trend strength
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Effective evaluation of unusual price
movements, such as dips and spikes
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Effective understanding of trading activity
and behaviour
DISADVANTAGES
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Not effectively applied to trend less stocks
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Cannot be applied to all trending stocks
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Do
not use as a moving average crossover signal
See how some FX traders are using
the GMMA
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