Monday 30 August 2010

tips: true value of a pair

I read this from a book, so I think I share here too. When the price of the pair is near to Moving Averages (example EMA), it is closer to its true value. When the pair is moving further from the MA, it is said that the pair is overpriced. The Moving average can be at any value. The closer the price to the Moving Average, the more value to the price. When price moving away from moving average, it is overprice; and when we bought overpriced pair, we hope for bigger fool to bought it too and make the price go further. So the conclusion is, when the price is closer to MA, the price is more worth the value.