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Figure 5. The first blue arrow points a short-term oversold condition of the daily sterling/dollar.   The second blue arrow shows a medium-term oversold condition.  The red arrow points to a short term overbought situation. (click to enlarge)

One of most common reasons to use averages is the intersection between two moving averages –this is known as the double crossover method.
However, given that the averages are lagging tools, they tend to be better confirmation signals than entry or exit signals.  On a combination of two moving averages, a buying signal occurs when the shorter of two averages intersects the longer one upward. This strategy provides many false breakouts.

For instance, as you can see in Figure 6, the first blue arrow points to an entry signal, as defined by the upward crossover of the euro/yen cross above the 10-day moving average.  The second arrow points to the upward crossover of the 10-day moving average above the 40-day moving average.  The second signal is late.

Figure 6. Buying signal generated by the intersection of a 10-day and a 40-day moving averages on the euro/yen chart. (click to enlarge)

The selling signal is seen when the shorter moving average (10-day) intersects a longer one downward (40-day). See Figure 7. 

Figure 7. Selling signal generated by the intersection of 10-day and 40-day moving averages on the euro/yen daily chart. (click to enlarge)

A variation of the double crossover method is the Japanese cross: a dead cross and a golden cross.

A dead cross is formed by the intersection of two consecutive moving averages that move in opposite directions. This type of cross is very inconsistent in its signals and should be disregarded.  See Figure 8.