Stochastic is a crossover oscillator indicator while moving average is a trend indicator.
Today being Wednesday 10th the July of 2019, the AUD/JPY market has been in a bullish trend most of the time.AUD/JPY market has managed to rise above 75.61. The question is will this bullish trend continue or will the AUD/JPY market reverse and become a bearish trend. This is indicated from the candlesticks chart below; From the candlesticks chart above, there is point A which represents the crossover between stochastic and signal line and point B located along the moving average. Although the AUD/JPY market has been in a bullish trend most of the time and we don't know whether the AUD/JPY market will continue to be in this bullish condition or it will reverse and become a bearish trend, we can use the concept of Stochastic and moving average to predict the direction of the AUD/JPY market for the remaining time. Using the concept of Stochastic, the market is normally considered to be overbought if the stochastic crosses below the signal line at above 80 and oversold if the Stochastic crosses above the signal line at below 20. At point A, the stochastic has crossed below the signal line at above 80 thus an indication of an overbought AUD/JPY market condition.Although the AUD/JPY market has been bullish today and managed to rise above 75.61, we can decide to follow the concept of Stochastic and open a sell position because crossover at above 80, that is an indication of an overbought market condition thus the AUD/JPY market will reverse and start a downwards trend. Using the concept of moving average ,the market is considered to experience a reversal trend if the price rises above the highest high of a moving average or falls below the lowest low of a moving average.At point B, the price has risen above the highest high of a moving average thus a downward reversal trend has started to take place. Although today the AUD/JPY market has been in a bullish trend and managed to rise above 75.61, We can decide to follow the concept of moving average because the price has risen above the highest high of a moving average and open a sell position. Here is how our trading idea for AUD/JPY sell market looks like today; SELL 75.61 T/P 75.21 S/L 76.01 Make sure to apply risk management while opening your position because this is not an investment advice but just a trading idea