Moving Average Analysis & MA Trading Signals

An technical indicator that calculates the average value of prices (or any given data series) over a pre determined period of time.

The only significant difference between various types of MAs is weight assigned to most recent data. Simple MAs apply equal weight to the prices. Exponential & weighted averages apply more weight to recent prices.

Interpretation

The most popular technique of interpreting the MA indicator is to compare the relationship between the MA of the price with the price itself. A buy trading signal gets generated when the price rises above its Moving Average & a sell signal gets generated when price falls below its Moving Average.

Moving Average Indicator

Buy & Sell Signals generated by Moving Average crossing above or below the price action.

Moving Average Crossover Strategy

Also popular are various types of Moving Average cross-over systems. Such systems often include 2 or more MAs crossing above/below each other & perhaps even utilizing other indicators as additional entry & exit confirmation signals. The combinations of conditions for these types of systems are almost limitless.

Moving Average Crossover System