Stock Technical Analysis (Moving Averages)

"Moving Averages"

Pertains to the average value of a stock's price over a specific duration.

1. Moving averages are generally used to measure momentum and define areas of possible support and resistance.
2. If the stock is above the moving average the trend is said to be bullish but if the stock is below the moving average the trend is bearish.
3. An upward cross of a short term moving average against a low term moving average validates an upward momentum, while a downward cross validates a downward momentum.

"Simple Moving Averages"

The average closing prices of a stock given a specific duration. Each closing price has equal weight in equation.

"Exponential Moving Averages"

The average closing prices of a stock given a specific duration. More recent closing prices have more weight in the equation.

"Combining 2 or 3 Moving Averages"

It would be good to combine 2 or 3 moving averages. One short term and one long term moving average. The rule of thumb is the longer the moving average the stronger and more reliable it is. The shorter the moving average the weaker it is.

Below is my personal moving average notes;

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