A moving average crossover is a technical analysis technique used in forex trading to identify potential changes in market trends. In this method, one currency pair's average price is compared to another's average price with a different time frame over a specified period.


When the shorter-term moving average crosses above the longer-term moving average, it is considered a bullish signal, suggesting that the market trend is shifting upward. Alternatively, when the shorter-term moving average crosses below the longer-term moving average, it's considered a bearish signal, indicating that the market trend is shifting downward.


Moving average crossovers are frequently used by traders to generate buy or sell signals. Traders may enter long positions when the shorter-term moving average crosses above the longer-term moving average, and exit long positions when the opposite occurs. By using multiple moving averages with different timeframes, a trader can also confirm a trend and identify potential entry or exit points.


It's important to note that moving averages are lagging indicators, meaning they're based on past price data, and may not accurately predict future price movements. To make informed trading decisions, it is important to combine moving average crossovers with other technical and fundamental analysis tools.