Moving average (MA)

The average closing price over a set number of recent periods, plotted as a line.

Definition

A moving average smooths price to show the trend. The 20-day is often used for the short term, the 50-day for the intermediate trend and the 200-day for the long term. Price above a rising average is generally read as an uptrend.

Watch out for

Moving averages lag. They confirm trends but are slow to flag turns, and they whipsaw in sideways markets.

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