Moving average
An indicator that smooths price by averaging the last N periods, revealing the trend direction and filtering out short-term noise.
The moving average is one of the most used indicators in technical analysis. It calculates the average price of the last N periods and draws a continuous line on the chart, smoothing the swings and making the trend direction clearer.
There are two main types. The simple moving average (SMA) gives equal weight to all periods. The exponential moving average (EMA) gives more weight to recent prices, reacting faster to changes. Short periods (9, 20) react quickly; long ones (50, 200) show the underlying trend.
Traders use the moving average in three ways: to read direction (price above the average = upward bias; below = downward); as dynamic support or resistance, where price tends to "respect" the line; and through crossovers, when a short average crosses a long one, signaling a possible turn.
The weak point is lag: being an average, it always confirms the move after it has started. That is why it works best combined with other signals — like the RSI — and within the context of the trend, not as a standalone trigger.