Moving averages are one of the most popular, easy & used indicator in technical analysis & also it can be used as an overbought / oversold indicator.The term "Moving" refers to the method of calculation which takes the average value over a fixed period of time and adds the latest period data to the calculation of the average while dropping the first period of the calculation so that the average continues to be calculated by the same number of periods but moves with each new period of data that occurs.
A 14 day moving average represents the trend in prices over a period of 14 days. A longer 50 day moving average is smoothed more than a 14 day moving average with each new day's data making less impact on the calculation of the moving average value than a shorter term moving average such as the 14 day moving average.In Moving average, if price is above the moving average it indicate bullish behavior. While when the prices are below the moving average it is an indication of bearish behavior in relation to the trend length being viewed.The signal of moving average is to buy when the securities price moves above its moving average and to sell when the price moves below its moving average.Types of moving averages on the chart:- Simple Moving Average (SMA)- Exponential Moving Average (EMA)- Smoothed Moving Average (SMMA)- Linear Weighted Moving Average (LWMA) FOR MORE INFORMATION CLICK HERE
1 comment:
Thanks for this interesting post. It helps me a lot.
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