📊 Technical Indicators
What are Moving Averages in Trading?
Moving averages smooth out price data to identify trends. SMA uses simple average; EMA gives more weight to recent prices.
Moving averages are foundational technical indicators that smooth out price data to reveal trends. They're used in countless trading strategies and are building blocks for other indicators like MACD and Bollinger Bands.
Types of Moving Averages
- . **Simple Moving Average (SMA)**: Equal weight to all prices in the period
- . **Exponential Moving Average (EMA)**: More weight on recent prices, reacts faster
Common Moving Average Periods
- **9/10 EMA**: Short-term trend
- **20 SMA/EMA**: Short-term trend
- **50 SMA/EMA**: Medium-term trend
- **200 SMA**: Long-term trend, institutional favorite
Moving Average Signals
- **Price above MA**: Uptrend
- **Price below MA**: Downtrend
- **MA Crossovers**: When shorter MA crosses longer MA (Golden Cross / Death Cross)
💡 Key Points
- ✓SMAs give equal weight; EMAs emphasize recent prices
- ✓50 and 200 SMAs are watched by institutional traders
- ✓MAs act as dynamic support/resistance levels
- ✓Crossovers signal potential trend changes
- ✓Use multiple timeframes for confirmation
How to Use Moving Averages
- 1Use 200 SMA to determine the long-term trend direction
- 2Trade in the direction of the trend (above 200 SMA = bullish bias)
- 3Look for pullbacks to key MAs as entry points
- 4Watch for Golden Cross (50 crosses above 200) as bullish signal
- 5Watch for Death Cross (50 crosses below 200) as bearish signal