A simple moving average is a statistical calculation that involves taking the average price of a security over a set period, then plotting that average as a line on a chart. The most common moving averages are the 50-day, 100-day, and 200-day. These averages smooth out price action and help identify trends and trend reversals. A price crossover occurs when a stock's price crosses above or below a moving average line on a chart. A bullish crossover occurs when the price crosses above the moving average and is seen as a signal of a potential uptrend. Conversely, a bearish crossover occurs when the price crosses below the moving average and is seen as a signal of a possible downtrend.
Moving Averages - Technical Analysis from A to Z
A Moving Average is an indicator that shows the average value of a security's price over some time. A mathematical analysis of the security's average value over a predetermined period is made when calculating a moving average. As the security's price changes, its average price increases or decreases. The most popular method of interpreting a moving average is to compare the relationship between a moving average and the stock's price. A buy signal is generated when the security's price rises above its moving average, and a sell signal is generated when the security's price falls below its moving average.
Moving Averages - Technical Analysis from A to Z