Moving Average

A moving average (MA) plots the average closing price over a set number of periods (like 20, 50, or 200). It "moves" because each new period adds a new close and drops the oldest. The line smooths out the noise of raw candles and reveals the underlying trend direction. There are two main types. The Simple Moving Average (SMA) gives equal weight to every period. The Exponential Moving Average (EMA) gives more weight to recent prices, so it reacts faster to new information. Most pros use the EMA for shorter periods (20 EMA for entries) and the SMA for longer ones (200 SMA for trend). MAs act as dynamic support and resistance. In an uptrend, price often pulls back to the 20 EMA and bounces. In a downtrend, rallies get sold at the 20 EMA. The 200 EMA on the daily is the line between "long-term bull" and "long-term bear" for most pairs.