What is a moving average?

The moving average is the most diverse and widely used technical indicator.

The average price is calculated by dividing the sequential average of the price volatility over a certain period of time by the value of the analysis period, and it appears as a line.

It is a tool that checks the direction of price changes over a certain period of time through a moving average line and analyzes its relationship with the current price.

● Definition of moving average

1.Moving Average (MA) literally refers to the average of the closing prices over the last n days, including the current closing price.

2.N The daily moving average, that is, the 5-day moving average of the relevant day, is the average of the closing prices of the previous 5 days, including the closing price of the relevant day.

3.Usually, 5, 10, 20, 60, and 120 Ridong average lines are mainly used.

● Types and advantages of moving average

1.Moving averages include simple moving average, exponential moving average, and weighted moving average.

2.The advantage of using a moving average line is that it is convenient to calculate, and buying/selling can be mechanically and objectively derived based on the calculation results.

● Characteristics of moving average

The 5-day moving average plays an important role in identifying short-term trends.

(This is the moving average line that is mainly used for short-term trading. In the cryptocurrency market, there is a saying that the 3-day moving average is more accurate.)

The 20-day moving average is called the intermediate term or psychological line. It is often used in conjunction with the 5-day average.

(If the 5th and 20th lines intersect upward, it is known as a golden cross, and if they intersect downward, it is known as a dead cross.)

The 60-day moving average is called a medium-term trend line or supply and demand line.

If the price is above the 5th, 20th, and 60th, it is called a positive alignment, and the 60-day moving average acts as a strong support line when making a downward adjustment.

After the mid-term falling price changes to an upward trend, a short-term golden trance generally occurs between the 5-day moving average and the 20-day moving average at the bottom.

The 120-day moving average is called the long-term trend or economic line. It is generally known that stocks lead the economy by about 6 months, and the moving average can be seen as reflecting this factor.

The primary signal to determine whether major indices have entered a mid- to long-term upward rally can be seen as the doppler of the 120-day moving average line.