The SMA20 (Simple Moving Average of 20 periods) crossing over the SMA200 (Simple Moving Average of 200 periods) is a widely used analytical pattern to identify potential market uptrends. This crossover suggests that the shorter-term moving average is rising faster than the longer-term moving average, indicating a possible shift in the market sentiment toward a bullish trend.
Logic of the algorithm:
- Scans for a cross over of SMA20 over SMA200
- Fires if the SMA20 remains above the SMA200
- Pre-configured for the candle of 1h (recommended not to go below 30 minutes).
- For an additional confirmation, traders can combine this SMA crossover strategy with a volume increase indicator. A surge in trading volume during the SMA crossover can provide further validation of the potential uptrend and increase the confidence in the trading signal.