MOVING AVERAGE - MA

A well-known technical indicator that helps loosen up price action by screening the noise from random price volatility. It is a trend-follower or lagging indicator because it is anchored on previous prices. There are two fundamental and commonly used moving averages: the simple moving average (SMA), which is simply the mean of a security over a specified number of days, and the exponential moving average (EMA), which gives greater weight to latest prices. MAs are used to evaluate the trend direction and identify support and resistance levels. While MAs are really useful, they also create the reference for other technical indicators such as Moving Average Convergence Divergence (MACD).