Moving Average

A moving average is one of the oldest and most widely used technical indicators. It calculates the average price over a specified number of periods and plots it as a line on the chart. As each new period closes, the oldest data drops off and the newest is added, so the average "moves" with time.

The two main types are Simple Moving Average (SMA), which weights all periods equally, and Exponential Moving Average (EMA), which gives more weight to recent prices. EMAs react faster to price changes, which some traders prefer for short-term analysis. SMAs are smoother and less prone to whipsaws.

Common uses include identifying trend direction (price above the 200 MA is generally bullish, below is bearish), finding dynamic support and resistance (price often bounces off key MAs), and generating crossover signals (when a shorter MA crosses above a longer one, it's considered a buy signal). The 50 and 200-period moving averages are the most widely watched across all markets.