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Traders and market analysts commonly use several periods in creating moving averages to plot as technical indicators on their charts.

Moving averages are one of the most commonly used technical indicators in stock, futures and forex trading. Moving averages are utilized as trend indicators and to identify significant support and resistance levels. Traders and market analysts watch for crossovers of longer-term moving averages by shorter-term moving averages as possible indicators of trend change in intraday trading and in regard to long-term trends.

There are numerous variations of moving averages. They can be calculated based on closing price, opening price, high price, low price or a calculation combining those various price levels. Most moving averages are some form of either the simple moving average (SMA), which is just the average price over a given time period, or the exponential moving average (EMA), which is designed to respond more rapidly to recent price changes.

Commonly Used Moving Averages

For identifying significant, long-term support and resistance levels and overall trends, the 50-day, 100-day and 200-day moving averages are the most common. Based on historical statistics, these longer-term moving averages are considered more reliable trend indicators and less susceptible to temporary fluctuations in price. The 200-day moving average is considered especially significant in stock trading. As long as the 50-day moving average of a stock price remains above the 200-day moving average, the stock is generally thought to be in a bullish trend. A crossover to the downside of the 200-day moving average is interpreted as bearish.

The 5-, 10-, 20-, and 50-day moving averages are often used to spot near-term trend changes. Changes in direction by any of these shorter-term moving averages are watched as possible early clues to longer-term trend changes. Crossovers of the 50-day moving average by either the 10-day or 20-day moving average are regarded as significant. The 10-day moving average, plotted on an hourly chart, is frequently used to guide traders in intraday trading.

Some traders use Fibonacci numbers (5, 8, 13, 21 ...) to select moving averages.

For more, read the Moving Averages tutorial

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