Short-term moving averages (such as the 5-day, 10-day, and 20-day moving averages) are calculated over shorter time spans and are mainly used to capture short-term market trends. They are highly sensitive and can quickly reflect price changes, but they are also susceptible to short-term fluctuations, potentially generating false signals. Key Characteristics of Short-Term Moving Averages: 1. High Sensitivity: They quickly respond to market trend changes, making them suitable for short-term trading. 2. Trend Guidance: Often used to identify short-term market trends, especially in volatile markets. 3. Close to Price: When the price is above the short-term moving average, it signals market strength; when below, it indicates weakness. 4. Cross Signals: When a short-term moving average crosses above or below longer-term moving averages, it creates "golden cross" or "death cross" signals, indicating buy or sell opportunities. In forex fundamental analysis, short-term moving averages help quickly capture the market's reaction to fundamental news such as interest rate decisions, non-farm payrolls, and GDP data. After the release of significant news, short-term moving averages can assist traders in identifying market sentiment and confirming trends. Additionally, short-term moving averages act as dynamic support or resistance, helping to determine entry and exit points. Limitations of Short-Term Moving Averages: 1. Overly Sensitive: They can be easily influenced by short-term price fluctuations, leading to false signals. 2. Limited Effectiveness Alone: They should be used alongside other technical indicators or fundamental analysis. 3. Lagging Effect: Despite being sensitive, short-term moving averages still have some lag and cannot predict sudden market changes. Therefore, it is recommended to combine short-term moving averages with other technical analysis tools and fundamental data to improve the accuracy and success rate of trading decisions.