How To Use a Moving Average to Buy Stocks
One of the primary objectives of any market analyst is to determine what exactly the market is doing. Is it rising or falling, trending or consolidating? And how do you know? For most, that analysis begins with moving averages. In fact, a commonly accepted definition of a bull market is one that is trading above its 200-day moving average—and the inverse is true for a bear market.
Moving averages are a staple of technical analysis because they help traders determine what is happening in the market by smoothing out price data and filtering out short-term volatility. Traders use them to determine if a market is trending and, if it is trending, as dynamic support and resistance levels.
Many traders also use moving averages as the…
