Moving averages
SMA, EMA, dynamic support and resistance, and ribbons.
Moving averages
| Concept | Explanation | |---|---| | Simple moving average (SMA) | Average price over a fixed lookback period. | | Exponential moving average (EMA) | Moving average that gives greater weight to recent observations. | | Price above an average | Often interpreted as positive trend positioning. | | Price below an average | Often interpreted as negative trend positioning. | | Moving-average support or resistance | Price repeatedly reacts near an average, making it a dynamic reference level. | | Moving-average ribbon | Multiple averages displayed together to show alignment, compression, and expansion. |
Moving averages summarize past prices. They do not know whether the next move will continue, and they react poorly in sideways markets.