Technical Analysis Moving Average

The easiest and truest form to gauge price movement and price action can be visually presented by a technical analysis moving average.

A moving average is a technical analysis tool used to show an average value of a stock price over a certain period.

It really doesn’t matter what time frame or what period of time you set for your moving average, the moving average will basically combine the stock prices for that period and divide it by the given timeframe, to give you an average price shown as a line on your chart.

For example, a 20 period moving average on a 5 minute chart represents the average price of 20 five minute candles.

If we applied a 100 technical analysis day moving average to the stock of ABD, the moving average as one of the day trading indicators shows the average price for ABD stock over a period of 100 days.

If ABD traded at $12 on day 1, rose to $15 by day 12, happily trading at $19 on day 20.

The moving average indicates that the stock has been moving higher as the average price has risen over the 100 day period.

Technical analysis of stock market trends has us looking for a rising moving average, where the actual bar trades above the moving average.

By day 40, our ABD stock is at $35, at day 80, the price is $89 and on day 100 the price is at a hefty $96. This is clearly a stock in an uptrend.

The average price is altered by each day of trading. When you hover over your moving average line, the average price would be say $41.

This is only taking into account the prices that we have listed above.

This is the reason the moving average would be shown under the actual price of the bar.

Below is a 1 day chart of a stock and it shows the price movement and the moving average. You will notice that the moving average has a different price than what the stock is trading at that moment.

This is because the moving average is lagging behind the stock.

Learn The 2nd Biggest Advantages for Understanding Moving Averages

• Understanding the 20 day Technical Analysis Moving Average
• Stock Market for Beginners: understanding the 50 day moving average
• 3 200 Moving Average Rules That Should Never Be Broken
• Understanding the Psychology of the 200 Day Moving Average
• Understanding the Psychology of the 50 Day Moving Average
• Understanding the Psychology of the 20 Day Moving Average