Definition

A Moving Average (MA) is a calculation that helps you see an asset's average price over a specific period of time. By smoothing out price data, it reduces market noise and makes it easier to identify the general trend direction. Whether it's the Simple Moving Average (SMA) or the Exponential Moving Average (EMA), MAs are foundational tools in technical analysis.

Suggested Trading Use

Use the Moving Average to grasp the underlying trend of an asset. If the price is consistently above the MA line, you're looking at a generally bullish market. If it's below, the market is likely bearish. MAs can also serve as dynamic support and resistance levels.

When the price approaches the MA, watch closely for potential reversal or continuation patterns. This gives you key entry or exit points in your trades, helping you to trade more efficiently within the market's current context.