Everyone repeat after me, "Price reverts to the mean". Say it...

Everyone repeat after me, "Price reverts to the mean". Say it five times.

I use to always keep a 200 day simple moving average on my charts such as the blue line (below) to remind me of this. I find that for the majority of stocks in long term uptrend the price will revert to the 200 day moving average at least once per year.



Last year I came across the EMA bands/ribbons/envelopes, whatever you want to call them, fast and slow, used by Carl Capolignua of Think Markets. I've found them very useful.



He describes their setup here. I had previously messed about with Ichimoku clouds but found they are too volatile (short term) for my style of active investing.