In a single word: No.
I often hear of or read the comment that analysts use movingaverages to predict price direction and even the next close. I startedmy career as a technical analyst way back when I was working in HongKong and my treasurer sent me on a technical analysis seminar where Ilearned about golden crosses and dead crosses. In particular, statedthe presenter, use a 20 days and 60 average to represent a 1 month and3 month average.
"Great!" thought I, "this is going to make my life easier. I can't wait to get back into the dealing room to try this out."
In those days the fashion was to draw your own charts to get abetter "feel" for the market and thus I used to draw the averages onlarge charts stuck to the wall.
What a waste of time…
Every time the 20 days average crossed above the 60 days average price reversed lower.
OK. Then throw average out of the window… Since that time I have never used averages in my analysis again.
That was around 1989-1990 just as real time technical analysissystems started appearing in trading rooms. Over the 1990's I becameinterested in building systems and it was around the mid 90's that Ikept hearing this statement about how moving averages predict price.
Well, using a programmable technical analysis software I set up thesoftware to write a report for me that summarized the close to closeprofit or loss generated from using the underlying moving averagedirection. Hence, when the moving average was rising I would thenmeasure the profit or loss generated from close to close over the nextday, and vice versa when the average was declining. Which average did Iuse? For the sake of simplicity I used the market favorite, the 20period moving average used by the fund management industry.
The following are the results for six currency pairs showing the average profit & loss and the percentage of winning trades:

USDJPY EURUSD USDCHF GBPUSD GBPJPY AUDUSD
% Winning Trades 50.06 49.55 48.42 48.93 48.64 49.13
Average Profit 0.62 0.0053 0.0079 0.0066 1.01 0.0035
Average Loss 0.60 0.0050 0.0072 0.0062 1.06 0.0033
Note that in all cases the average profit is not any higher than thebid-ask spread and mostly lower. This doesn't really give me anyconfidence in using a moving average to predict the next day's close toclose movement.
The moral of the story? Don't expect too much from your indicators.There is nothing magic about any of them in providing anything butcircumstantial supporting evidence of a trade. All indicators, whateverthe creator's claim, are lagging indicators since they are based offhistoric prices and therefore reflect what has been and not what willbe. They can provide you with information about the generalcharacteristic of price action at that time but the real informationyou require is all in price and it is in the understanding of price andtrading mentality that will help you pick better trades.
Ian Copsey
Global Forex Trading
http://www.gftforex.com