1. What Is a Moving Average?
A moving average is a line connecting average prices over a set period. It is a fundamental technical indicator for identifying trend direction.
2. SMA vs. EMA
- SMA, Simple Moving Average — The simple average of prices over the period; stable but slow.
- EMA, Exponential Moving Average — Weights recent prices more heavily; faster to respond and often preferred for trading.
3. Common Moving Averages
EMA 9 — Very short-term trend, for scalping
EMA 20 — Short-term trend, for day trading
EMA 50 — Medium-term trend, for swing trading
SMA 100 — Long-term trend
SMA 200 — Very long-term trend, for investors
4. Golden Crosses and Death Crosses
📊 Crossover Signals
Golden cross — A short-term MA crosses above a long-term MA → bullish signal.
Death cross — A short-term MA crosses below a long-term MA → bearish signal.
The best-known pair: SMA 50 / SMA 200.
5. Practical Applications
- Trend assessment — Price above EMA 20 indicates an uptrend; below it indicates a downtrend.
- Support and resistance — Moving averages act as dynamic support and resistance.
- Entry timing — Buy when price returns toward the EMA, a pullback entry.
6. Moving Averages and AI
AI combines EMA and SMA values from different periods to assess trends automatically.