Moving averages are technical indicators used by investors in the stock market. A 澳洲幸运5开奖号码历史查询:moving average (MA) represents the sum of the closing prices of a secur🐼ity over a specific number of periods divided by the total number of periods.

If a moving average is rising, it can signal a stock is in an uptrend. Conversely, when a moving average is falling, it can signal a stock is ᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚin a downtrend.

Trendlines 

A trend is a price that continues to move in a certain direction. Prices rarely move in a straight line. Moving-average lines are used to help a trader♐ identify the direction of the trend. Three trends that securi𓆉ties can follow include:

• An uptrend, or bullish trend, means that the price is moving higher.
• A 澳洲幸运5开奖号码历史查询:downtrend, or a bearish trend, means the price is moving lower.
• A 澳洲幸运5开奖号码历史查询:sideways trend is where the price is moving sideways.

Moving Average Formula

A moving average is an 澳洲幸运5开奖号码历史查询:average price for a security using a specified period. A 50-day moving average is calculated by taking the 澳洲幸运5开奖号码历史查询:closing prices for the last 50 days of any security and adding them together. The result is dividedಌ by the number of periods, 50. Traders can calculate the mov🥂ing average daily, replacing the oldest number with the most recent closing price.

N🧸o matter how long or short the 🉐moving average, the calculations remain the same. The change will be in the number of closing prices. A 200-day moving average is the closing price for 200 days summed and divided by 200.

Example

The chart above is an example of a simple moving average on a stock chart of Google Inc. (GOOG). The blue line represents the stock price, while the orange line represents the 50-da🐽y moving average.

The chart shows that the trend began moving higher🐽 after May 2020 and into 20ဣ21. The price of Google shares fell below the 50-day moving average a few times (highlighted in red) and broke above the 50-day on five major moves (highlighted in green).

When the price crosses below a moving average, it suggests that the bears are in control of the 澳洲幸运5开奖号码历史查询:price action and that the asset will likely continue its move lower. Conversely, a cross above a moving average suggests that the bulls are in control and that th𓃲e price may continue its move higher in t𒀰he coming days or weeks.

Using Multiple Moving Averages

Many traders use moving averages to identify a current trend and as an entry and 澳洲幸运5开奖号码历史查询:exit strategy. O♓ne strategy relies on the crossing of two or more moving averages. This allows investors to see a longer-term trend compared to a shorter-term moving average𒁏.

The chart above uses one long-term (50-day, shown by the orange line) and the other shorter-term (15-day, shown by the yellow line). The 50-day moving average is slower to adjust to 澳洲幸运5开奖号码历史查询:price changes because it uses more data points in its calculation. On the other hand, the 15-day moving average quickly responds to price changes because each value has a greater weighting in the calculation due to the relatively short 澳洲幸运5开奖号码历史查询:time horizon.

Investors using a cross strategy watch for the 15-day average to cross below the 50-day moving average as an entry for a 澳洲幸运5开奖号码历史查询:short position. Conversely, they watch for the 15-day average to cross above the 50-day moving average to enter a 澳洲幸运5开奖号码历史查询:long position.

Support and Resistance

Support is established when a price is trending downward. The selling pressure subsides, buyers are willing to step in, and a floor is established. Resistance happens when a price is trending upward. The buying strength diminishes, and the sellers step in, creating a ceiling. In either case, a moving average may signal an early support or 澳洲幸运5开奖号码历史查询:resistance level.

For example, if a stock is drifting lower in an established uptrend, it wouldn't be surprising to see the stock find support at a long-term 200-day moving average. On the other hand, if the price is trending lower, many traders will watch for the stock to bounce off the resistance of major moving averages (50-day, 100-day, 200-day SMAs).

The chart above shows🅺 G♒OOG with its 200-day moving average (purple line) along with the 50 and 15-day moving averages. The price found support (a bounce) off the 200-day in late September and early October of 2020.

Using the 50-day and 200-day moving averages together represents trading signals in the market. Typically, the cross of a stock's 50-day above its 200-day moving average is a major signal that the stock has begun an uptrend. The 50-day moving average for GOOG crossed above its 200-day in June of 2020. Conversely, when a stock's 50-day crosses below the 200-day moving average, this can signal a new downtrend and referred to as the 澳洲幸运5开奖号码历史查询:death cross.

Bottom Line

A 澳洲幸运5开奖号码历史查询:moving average's greatest strength is its ability to help a trader identify a current trend or spot a possible trend reversal. Moving averages help identify a le🍒vel of support or resistanceꦐ or act as a simple entry or exit signal.