Understanding Simple moving averages open-close crossover 9, 13, 20.

The SMA open-close crossover strategy utilizes the simple moving averages (SMA) of 9, 13, and 20 periods to identify potential trading signals based on the relationship between the opening and closing prices. Here's how this strategy works:

1. 9-period SMA: The 9-period SMA calculates the average price over the past 9 periods (which could be days, hours, or any other chosen timeframe). It represents the short-term trend and is sensitive to recent price movements.

2. 13-period SMA: The 13-period SMA calculates the average price over the past 13 periods. It provides a slightly longer-term perspective than the 9-period SMA and helps smooth out short-term volatility.

3. 20-period SMA: The 20-period SMA calculates the average price over the past 20 periods. It represents the medium-term trend and provides a broader view of price movements.

The crossover signals in this strategy are based on the relationship between the opening and closing prices. Here are two common types of crossovers used:

a. Bullish crossover: A bullish crossover occurs when the opening price crosses above the 9-period SMA or the 13-period SMA. This suggests potential bullish momentum and could be considered a buy signal.

b. Bearish crossover: A bearish crossover occurs when the opening price crosses below the 9-period SMA or the 13-period SMA. This suggests potential bearish momentum and could be considered a sell signal.

Traders using this strategy would typically monitor the crossovers between the opening price and the selected SMAs to generate trade signals. It's important to note that this strategy focuses solely on the relationship between opening and closing prices and does not take into account other technical indicators or fundamental factors. Therefore, it's advisable to combine this strategy with other analysis tools and consider market context before making trading decisions.