What triggers a buy signal in a multi-moving average system?

In a multi-moving average system, a buy signal is typically triggered when prices cross above both moving averages. This scenario indicates a potential bullish trend, suggesting that the price momentum has shifted from a downtrend or sideways movement to an uptrend.

By crossing above both moving averages, the price not only demonstrates strength above the short-term moving average but also shows that it is overcoming the longer-term moving average, which reinforces the validity of the upward movement. Traders interpret this as a confirmation of increasing demand, which is why it becomes a signal to enter a long position.

In contrast, when prices cross below both moving averages, that may indicate a strong downtrend, while being flat signifies consolidation or indecision in the market, and crossing above only one moving average could suggest a weak trend or false breakout. Thus, the clear commitment shown by crossing above both moving averages is the key factor that characterizes a strong buy signal in this context.