Moving averages smoothen out the price fluctuations of a security or index

by revealing its average closing price over a selected period.

Moving averages are reactive, as they are based on the historical price

action of the security or index.

They are plotted based on the selected frequency

(minutes/hours/days/weeks/months).

If a stock is trading above its 50-day moving average, then investors are

more bullish (positive) about that stock now than they have been, on average,

 during the last 50 trading days.

Similarly, if the stock is trading below its 50-day moving average, then investors are

more bearish (negative) about that stock now than they have been, on average,

during the last 50 trading days.

Intersection points are also important when viewing moving averages.

If a stock crosses its 50-day moving average trending downward, for example, this could

be interpreted as a signal to sell.

Similarly, if the stock crosses its 50-day moving average trending upward, this

could be interpreted as a signal to buy.

Ten-day and 20-day moving average are considered useful for pinpointing

very short-term price trends.

Fifty-day averages are considered useful for showing intermediate-term price trends.

And 100-day and 200-day moving averages are considered useful for

 interpreting longer-term price trends.

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