Moving Average
A technical indicator that smooths price data by creating a constantly updated average price over a specific period.
Definition
A moving average (MA) is a widely used technical analysis indicator that smooths out price data by creating a constantly updated average price. The two most common types are the Simple Moving Average (SMA), which calculates the arithmetic mean of prices over a period, and the Exponential Moving Average (EMA), which gives more weight to recent prices. Common periods include 20-day (short-term), 50-day (medium-term), and 200-day (long-term). A "golden cross" occurs when the 50-day MA crosses above the 200-day MA (bullish signal), while a "death cross" is the opposite (bearish signal). Moving averages serve as dynamic support and resistance levels and help identify trend direction.
Related Terms
Technical Analysis
A method of evaluating securities by analyzing price charts, patterns, and statistical indicators.
TradingSupport and Resistance
Price levels where buying or selling pressure is strong enough to prevent further price movement.
TradingFibonacci Retracement
A technical analysis tool using horizontal lines at key Fibonacci levels to identify support and resistance.