A moving average (MA) is the average close over a period. It smooths out noise so you can see the underlying direction.
Simple (SMA) and exponential (EMA) are the two common types. The EMA reacts faster to recent price.
Price above a rising MA is a bullish signal; below a falling MA is bearish. Crossovers of a faster and slower MA are lagging signals, so use them with structure.
Moving averages do not predict the future; they describe the past. Use them as a filter, not a reason to trade.
Takeaways
- A moving average smooths price to reveal direction.
- EMA reacts faster than SMA; price above a rising MA is bullish.
- MAs describe the past - use as a filter, not a trade trigger.
Self-check
Is a moving average predictive?
No - it lags and describes past price; use it with structure.
Trading involves risk. Educational only, not advice. Mark it complete to bank progress.