
The Guppy Multiple Moving Average (GMMA) is a technical indicator that uses moving average ribbons to identify potential breakout points in the price of an asset. It was developed by Australian financial columnist and author Daryl Guppy, who introduced the concept in his book, Trading Tactics. The GMMA is composed of 12 exponential moving averages (EMAs), which are divided into two groups: a short-term group and a long-term group. The short-term group typically includes 3, 5, 8, 10, 12, and 15-period averages, while the long-term group consists of 30, 35, 40, 45, 50, and 60-period averages. By observing the crossover of these ribbons and the compression or expansion of the gap between them, traders can make informed decisions about market trends and potential trading opportunities.
What You'll Learn
- The Guppy MMA is a technical indicator that identifies changing trends, breakouts and trading opportunities
- It uses 12 exponential moving averages (EMAs)
- It can be used to determine both the direction and strength of a trend
- It can be used for long-term and short-term trading
- It was developed by Australian trader Daryl Guppy
The Guppy MMA is a technical indicator that identifies changing trends, breakouts and trading opportunities
The Guppy Multiple Moving Average (GMMA) is a technical indicator that identifies changing trends, breakouts and trading opportunities. It was developed by Australian financial columnist and author Daryl Guppy. The GMMA uses exponential moving averages (EMAs) to capture the difference between price and value in a stock.
The GMMA consists of 12 EMAs, separated into two groups: a short-term group and a long-term group, each containing six MAs. The short-term MAs are typically set at 3, 5, 8, 10, 12, and 15 periods, while the long-term MAs are typically set at 30, 35, 40, 45, 50, and 60 periods. The short-term group of averages moving above the long-term group indicates a potential price uptrend, while the short-term group falling below the long-term group suggests a possible price downtrend.
The degree of separation between the short-term and long-term MAs can indicate trend strength. A wide separation suggests a strong prevailing trend, while narrow separation or intertwining lines indicate a weakening trend or period of consolidation. The crossover of the short-term and long-term MAs represents trend reversals. When the short-term MAs cross above the long-term MAs, a bullish reversal occurs, and when they cross below, a bearish reversal is taking place.
The GMMA can be used to identify changes in trends or gauge the strength of the current trend. It is best used alongside other technical indicators to maximise the odds of success. For example, the relative strength index (RSI) can be used to confirm whether a trend is poised for a reversal.
The GMMA can also be employed for trade signals. When the short-term group passes above the long-term group, it is a signal to buy, and when the short-term group passes below the long-term group, it is a signal to sell. These signals, however, should be avoided when the price and the MAs are moving sideways.
The Guppy Multiple Moving Average is a useful tool for traders, providing a visual representation of market sentiment and helping to identify potential trends and reversals.
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It uses 12 exponential moving averages (EMAs)
The Guppy Multiple Moving Average (GMMA) is a technical indicator that uses 12 exponential moving averages (EMAs) to identify potential trading opportunities. It was developed by Australian financial columnist and author Daryl Guppy, who introduced the concept in his book, "Trading Tactics".
The 12 EMAs used in the GMMA are divided into two groups: six short-term EMAs and six long-term EMAs. The short-term EMAs typically include 3, 5, 8, 10, 12, and 15-period averages, while the long-term EMAs include 30, 35, 40, 45, 50, and 60-period averages. These EMAs are then plotted on a price chart, with the short-term EMAs forming one ribbon and the long-term EMAs forming another.
By observing the crossover of these ribbons and the compression or expansion of the gap between them, traders can gain valuable insights into market sentiment and make more informed trading decisions. When the short-term ribbon crosses above the long-term ribbon, it indicates a potential uptrend, while a crossover below suggests a potential downtrend. Additionally, the degree of separation between the ribbons can indicate the strength of the trend. A wide separation suggests a strong trend, while narrow separation or intertwining lines indicate a weakening trend or consolidation period.
The Guppy MMA strategy is a valuable tool for identifying both short-term and long-term trends in financial markets. However, as with all trading strategies, it is essential to remember that it is not perfect and has certain limitations. Traders should use the Guppy MMA in conjunction with other indicators and analysis tools to maximise their odds of success.
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It can be used to determine both the direction and strength of a trend
The Guppy Multiple Moving Average (GMMA) is a technical indicator that combines 12 moving averages (MAs) to identify changing trends, breakouts, and trading opportunities in the price of an asset. It consists of a short-term group of six MAs and a long-term group of six MAs, which are overlaid on the price chart of an asset.
The Guppy MMA Oscillator is formed by calculating the difference between the short-term and long-term exponential moving averages. This allows traders to determine both the direction and strength of a trend.
When the short-term group of averages moves above the longer-term group, it indicates a potential uptrend, and when it crosses below, it suggests a possible downtrend. The degree of separation between the short-term and long-term MAs can also indicate trend strength. A wide separation suggests a strong trend, while narrow separation or crisscrossing lines indicate a weakening trend or consolidation period.
Additionally, the Guppy MMA Oscillator can provide bullish and bearish signals. A bullish signal occurs when the oscillator crosses above the zero line, while a bearish signal occurs when it crosses below.
It's important to note that the Guppy MMA is a lagging indicator, and traders should use it in conjunction with other technical indicators to maximize their success.
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It can be used for long-term and short-term trading
The Guppy Multiple Moving Average (GMMA) is a technical indicator that can be used for both long-term and short-term trading. It was developed by Daryl Guppy, an Australian financial columnist and author, and introduced in his book, "Trading Tactics".
The GMMA is composed of 12 exponential moving averages (EMAs), separated into two groups: a short-term group and a long-term group, each containing six MAs. The short-term group typically includes MAs set at 3, 5, 8, 10, 12, and 15 periods, while the long-term group usually consists of MAs set at 30, 35, 40, 45, 50, and 60 periods.
For long-term trading, the GMMA can help identify the overall trend and provide insights into the strength of the trend. A wide separation between the short-term and long-term MAs indicates a strong prevailing trend, while a narrow separation or intertwining lines suggest a weakening trend or a period of consolidation. Additionally, the crossover of the short-term MAs above the long-term MAs indicates a bullish reversal, while a crossover below suggests a bearish reversal.
For short-term trading, the GMMA can be used to identify short-term trends and potential trading opportunities. When the short-term MAs cross above the long-term MAs, it signals a potential price uptrend and a buying opportunity. Conversely, when the short-term MAs cross below the long-term MAs, it indicates a potential price downtrend and a selling opportunity. These signals are most reliable when the price is trending and should be avoided when the price and MAs are moving sideways.
The multiple lines of the GMMA provide a more nuanced view of the market sentiment and trend strength compared to using just one or two EMAs. However, it is important to note that the GMMA is a lagging indicator, and traders should use it in conjunction with other technical indicators to maximize their odds of success.
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It was developed by Australian trader Daryl Guppy
The Guppy Multiple Moving Average (GMMA) is a technical indicator that uses a combination of short-term and long-term exponential moving averages (EMAs) to predict potential breakouts in the price of an asset. It was developed by Australian trader Daryl Guppy, who is also a financial columnist and author of books on stock market trading techniques. Guppy has published eight books, including one on the Chinese stock market, and has spoken at conferences in 27 countries. He invented the GMMA, which is included in the MetaStock and other charting programs.
The GMMA is designed to capture the difference between price and value in a stock, with a convergence of these factors indicating a significant trend change. It consists of 12 EMAs, with six short-term and six long-term moving averages. The short-term MAs are typically set at 3, 5, 8, 10, 12, and 15 periods, while the long-term MAs are set at 30, 35, 40, 45, 50, and 60 periods.
The two sets of averages serve as proxies for short-term and long-term market participants, helping traders to make more informed decisions. When the short-term averages move above the long-term averages, it indicates a potential price uptrend, while a move below suggests a possible downtrend. The degree of separation between the short- and long-term MAs can also indicate the strength of the trend, with a wide separation suggesting a strong trend and narrow separation or crisscrossing lines indicating a weakening trend.
Guppy has stated that the GMMA is not a lagging indicator but rather a prior warning of a developing change in price and value. The multiple lines of the Guppy can help traders see the strength or weakness in a trend better than using only one or two EMAs. However, it is important to note that the GMMA is a collection of EMAs, which are lagging indicators themselves, as they represent the average price from the past.
In addition to his work on the GMMA, Guppy is also known as "The Chart Man" for his expertise in technical analysis. He has his own trading website, guppytraders.com, which he founded in 1996, and he contributes weekly columns to various financial magazines and media outlets, including CNBC Asia, CGTN Digital, and The Singapore and Malaysian business weekly, 'The Edge'. He also frequently appears on CNBC Asia and has spoken at all of Australia's stock exchanges.
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Frequently asked questions
The Guppy MMA uses exponential moving averages (EMAs).
The Guppy MMA uses 12 EMAs in total.
The short-term EMAs are typically set at 3, 5, 8, 10, 12, and 15 periods. The long-term EMAs are usually set at 30, 35, 40, 45, 50, and 60 periods.