Question

The moving average crossover rule A. states that a crossover of the short-term moving average above the long-term moving average signals that the foreign currency is depreciating. B. states that a crossover of the short-term moving average below the long-term moving average signals that the foreign currency is depreciating. C. states that a crossover of the long-term moving average above the short-term moving average signals that the foreign currency is appreciating. D. is a fundamental approach to forecasting exchange rates.

Answer 1

Answer: B. states that a crossover of the short-term moving average below the long-term moving average signals that the foreign currency is depreciating.

Explanation:

Moving Average trading indicators are heavily used in Forex trading to decide strategy especially over 10, 50, 100, and 200 day periods.

Long term signals can be generated on the basis of the moving average crossover rule.

Here, a short-term moving average going above a long-term moving average that is rising is used as a buy signal because it signals an appreciation to come.

Conversely, a short-term moving average going below a long-term moving average that is rising is used as a sell signal because it signals an DEPRECIATION to come.