Moving average

A moving average (MA) is a statistic that recomputes the average of the last N closing prices each time a new bar arrives, dragging a smoothed line along the chart. It is the oldest and most widely used trend-following indicator in technical analysis.

Traders read moving averages two ways: as a dynamic trend filter (price above a long MA = uptrend) and as a dynamic support/resistance level (price tends to pull back to it). The two most common variants are the simple moving average (SMA) and the exponential moving average (EMA), which differ in how they weight older observations.

A moving average always lags price: the longer the window, the more lag and the less noise. Choosing the window length is the central trade-off — too short and it whipsaws, too long and signals arrive after the move is over.