A Moving Average (MA) smooths price data by averaging closing prices over a specified period, revealing the underlying trend direction. MAs are the foundation of most technical indicators and serve as important cost reference points for institutional investors.
Short MA above long MA (bullish alignment) = uptrend. Short MA below long MA = downtrend.
In uptrends, pullbacks to MA20 or MA60 often find support. In downtrends, bounces to these MAs often meet resistance.
Short MA crossing above long MA = golden cross (buy). Crossing below = death cross (sell). Common pairs: MA5×MA20, MA20×MA60.
Bias = (Price − MA) ÷ MA × 100%. Large positive bias = overextended rally; large negative bias = oversold, may revert to mean.
SMA weights all periods equally; EMA gives more weight to recent prices and responds faster. Most stock charts use SMA; MACD uses EMA internally.
No. Combine with volume expansion and fundamentals. Golden crosses generate false signals in sideways markets.
Depends on which MA. Breaking MA5 is just short-term weakness. Breaking MA60 with no quick recovery is a medium-term bearish signal worth taking seriously.