GMMA

What is GMMA?

The Guppy Multiple Moving Average (GMMA) is a technical analysis indicator that employs several moving averages to assist traders in determining trends, trend strength, and possible reversals in the stock market.

It was created by Australian trader Daryl Guppy, and hence its name.

How GMMA Works?

GMMA employs 12 exponential moving averages (EMAs) in two groups:

• Short-term group (typically 3, 5, 8, 10, 12, 15-day EMAs)
  → Indicates the movement of short-term traders or speculators.
• Long-term group (typically 30, 35, 40, 45, 50, 60-day EMAs)
  → Indicating the moves of long-term investors.

Both groups are plotted together on a chart and form a pattern that resembles two ribbons or bands.

Reading GMMA

• Large gap between the two groups → Strong trend (either direction)
• Narrowing gap → Deteriorating trend or potential reversal
• Crossing over → Potential change in market direction

Why It Matters?

• GMMA assists traders:
• Identify entry and exit points
• Verify the power of a trend
• Eliminate false signals that tend to pop up with one moving average

Real-World Example

When the short-term averages begin to move above the long-term averages with increasing divergence, it might indicate a strong bull trend – a good point to buy. When they begin to converge, it might be the time to sell or wait.