How to read stock moving averages for important traders. You need to know this in order to measure stock prospects based on historical movements on the exchange. Moving Average is usually abbreviated as MA.
MA is a line obtained from the calculation of daily stock prices. Where to calculate the average price movement of a stock within a certain time.
The period of time starts from 1 week, 1 month, 3 months, and 6 months. From this it can be concluded if the moving average is a movement within a certain period of time.
For example, for MA 60 means price movements for the past 3 months. How to read the moving average of a stock must be careful.
Because, MA is one way to measure momentum and confirm trends and determine support and resistance areas. Even able to read the events that have occurred.
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How to Read Stock Moving Averages You Need to Know
The indicator of the average share price both closing and opening is connected in a line. MA follows the trend and lagging.
Because, this condition can be seen from the prices that have occurred at that time.
Nevertheless, lagging or delayed can be resolved with other types of MA. Moving Average is a standard type of technical analysis.
This indicates that how to read it is quite easy.
As an investor, of course, you need to know what you can do. The available indication is an information when the price trend is increasing.
This rising price is confirmed via bullish crossover. The condition of the short-term MA crosses above the long-term MA.
Vice versa, if the MA is sloping, it indicates that the asset value is weakening.
When the price trend goes down then bearish crossover be the sign. The long-term MA is actually above the short-term MA.
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Types of Moving Averages
Actually, how to read a stock moving average is quite simple. There are even several types of MA in the stock world that are quite instrumental for investors.
Types of Moving Averages include:
Exponential Moving Average
Exponential Moving Average (EMA) is able to give more weight to new prices so that analysis is more responsive to new information.
To calculate the EMA, investors must be able to calculate the Simple Moving Average first.
To give weight to the EMA, investors will multiply by a multiplier or multiplier factor.
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Simple Moving Average
As for the second type of MA, it is calculated using the arithmetic average of one particular value.
This one analysis shows a series of asset data that is combined first. Next you divide by the price of the asset.
How to read a stock moving average is actually quite easy. For that, investors must know how easy it is and what types of Moving Average stock analysis techniques are. (R10/HR-Online)
Source : HarapanRakyat.com