Moving average

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While the price of gold has fallen by almost $88 – or 6.3% – over last two weeks, we haven’t seen... For more information, read our latest forex news and reports.
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The Economic Times  Feb 18  Comment 
"We are bang in the middle of the resistance zone of about 6,130-6,150 levels," Gujral said.
MarketWatch  Jan 28  Comment 
The 50-day moving average is one of the most widely-followed technical analysis tools. This break occurred late last week, so technicians are now worried. What does the historical data suggest?
Forbes  Jan 24  Comment 
Apple's shares have bounced off its 50 day moving average three times this month. This could provide meaningful support to the shares.
Forbes  Jan 6  Comment 
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FX Street  Dec 3  Comment 
NZD/USD NZD/USD moved significantly higher during the last hours’ of trading activity, breaking... For more information, read our latest forex news and reports.
Reuters  Nov 5  Comment 
Reuters Market Eye - ITC Ltd sinks 3.3 percent, falling below its 200-day moving average for the first time in two months.
Forbes  Oct 4  Comment 
In trading on Friday, shares of Cameron International Corp (NYSE: CAM) crossed above their 200 day moving average of $61.18, changing hands as high as $61.85 per share. Cameron International Corp shares are currently trading up about 2% on the...




 
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A moving average is a smoothed-out trend line built from an underlying set of data - stock prices in the context of investing. The moving average is calculated by taking, for each point in time, the average values of the underlying data from the previous N timepoints. So, for example, the 10-day moving average for a stock price is the average price of the previous 10 days' closing prices for every given day. The average is said to be "moving" because the time period over which the average is calculated is always the previous ten days of data for each day, and therefore is different for each day.

Moving averages smooth out data over time, and technical traders believe they reveal an underlying trend in a security's price. By increasing "N" - IE, by looking at, for example, a 200 day moving average instead of a 10 day one, a trader would see a trend on a larger scale than with the 10-day moving average, but with decreased responsiveness - IE, only long after large changes in the stock price would the 200-day moving average start to tend in a new direction, given the weight of all the historical prices in the 200-day moving average.

Exponential moving averages give more weight to the latest data points in the moving average calculation, making them more responsive to recent changes in stock price.

Technical traders will look to the convergence or divergence of moving averages, known as MACD, with different periods (or values of "N") to indicate patterns of resistance or support which technical traders believe indicate where a stock price is likely to move in the future.

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