MA Alignment: Bullish, Bearish and Tangled

Short on top, long below

MA5 > MA10 > MA20 > MA60 in order is a bullish MA alignment: short-, medium- and long-term average costs are all rising. Flip it, with the shortest at the bottom, and it's a bearish MA alignment.

Tangled: direction undecided

When several moving averages bunch up and cross over each other, that's a MA tangle, common in ranges or at turning points. The direction they fan out in afterwards is often the next move's direction.

By the time they line up, the move is well underway

Moving averages are averages of past prices, so alignment can only confirm a trend that's already happened. By the time a bullish alignment forms, price is often far above its low. It tells you "there's a trend," not "how far it can go."

Key takeaways

• Bullish alignment: short averages on top, long ones below, in order (e.g. MA5 > MA10 > MA20 > MA60), showing average costs rising across every timeframe.
• Bearish alignment is the exact opposite. When averages bunch together and cross back and forth, it's an MA tangle, common in ranges or at turning points.
• The more the averages fan out, the steeper the trend. But alignment is built from averages, so it always trails price: by the time it forms, the move is often well underway.

Try it yourself

You can do these exercises in this lesson's interactive simulation:

1. Keep "Rally, then fall" and hover over any candle in the green zone: in the explanation card, what order are the four moving averages in, from top to bottom?
2. Press ▶ to play from the start and watch for the first "Bullish alignment" flag: how far had price risen from its low when the alignment formed, according to the explanation card?
3. Switch to "Sideways range": how many "Alignment switches" are there? How does the "hold during bullish alignment" return compare with buy and hold?
4. Change the MA set to "10·20·50·100": in "Rally, then fall," does the bullish alignment appear earlier or later? How does "Time in bullish alignment" change?

Quiz and explanations

1. MA5 = 12.3, MA10 = 12.0, MA20 = 11.6, MA60 = 10.8. This is…

Answer: A bullish alignment.From short to long, they run from highest to lowest in order: a bullish alignment.

2. Several moving averages are squeezed into a narrow range and keep crossing each other. What does that mean?

Answer: A directionless tangle, common in ranges or at turning points.A tangle shows short-term and long-term forces haven't lined up on the same side yet.

3. When a bullish alignment has just formed, the price has often already risen a fair way from its low. Why?

Answer: Moving averages lag: price has to travel a while before the averages line up in order.Moving averages are averages of past prices, so alignment can only confirm a trend that has already happened.

Terms in this lesson

• backtest (Backtest): Simulating rule-based trading on historical data to see how a strategy would have done.
• lag (Lag): Because indicators are built from past prices, their signals always come after the actual turn in price.
• bearish MA alignment (Bearish MA Alignment): Moving averages stacked from shortest at the bottom to longest on top, showing average costs falling across every timeframe.
• bullish MA alignment (Bullish MA Alignment): Moving averages stacked from shortest on top to longest at the bottom (such as MA5 > MA10 > MA20 > MA60), showing average costs rising across every timeframe.
• MA tangle (MA Tangle): Several moving averages bunched together and crossing back and forth, common in ranges or at trend turning points.