Glossary
Moving Average
Technical Analysis
A moving average smooths price by averaging it over a set number of periods, revealing trend direction with a lag.
A simple moving average (SMA) weights every period equally; an exponential moving average (EMA) weights recent prices more heavily and therefore reacts faster. The 50-, 100- and 200-period averages are the most widely watched because so many participants reference them.
Moving averages are lagging by construction: they confirm trend and act as dynamic support or resistance, but they cannot anticipate turns.