Moving Average Line

The moving average (MA) is a straightforward technical analysis tool that smooths out price data by calculating an average price that is constantly updated. The average is calculated over a set length of time, such as 10 days, 20 minutes, 30 weeks, or any other time period selected by the trader. There are benefits to employing a moving average in your trading, as well as many types of moving averages to choose from.

Moving average methods are also popular and can be customized to any time frame, making them suitable for both long and short-term investors and traders.

A moving average (MA) is a popular technical indicator for smoothing out price patterns by removing noise from short-term price swings.

Moving averages can be built in a variety of methods and with varying amounts of days for the averaging interval.

Moving averages are most commonly used to assess trend direction and predict support and resistance levels.

When asset prices cross over their moving averages, technical traders may receive a trading signal.

Moving averages are valuable on their own, but they also serve as the foundation for other technical indicators like the moving average convergence divergence (MACD).

Why We use Moving Average ?

On a price chart, a moving average reduces the amount of noise. To obtain a general notion of which way the price is trending, look at the direction of the moving average. If it's slanted up, the price is rising (or was recently); if it's inclined down, the price is falling; if it's angled sideways, the price is most likely in a range.

A moving average can also serve as resistance or support. A 50-day, 100-day, or 200-day moving average can operate as a support level in an uptrend, as demonstrated in the chart below. Because the average functions as a floor (support), the price rises when it hits it. A moving average can operate as resistance in a downturn; like a ceiling, the price hits the level and then begins to fall again.

The moving average will not always be respected by the price. Before reaching it, the price may run through it briefly or halt and reverse.

If the price is above a moving average, the trend is generally upward. The trend is down if the price is below a moving average. Moving averages, on the other hand, can have variable lengths (explained below), thus one MA might imply an uptrend while another might indicate a fall.