The moving average is the abbreviation of the moving average, which is a very important indicator to reflect the price trend, because once the trend is formed, it will continue for a period of time, so the moving average has a strong guiding role in the buying and selling operation of stocks. For investors, understanding the 3 major formulas of the moving average can better help investors see the law of ups and downs.
When the moving average is analyzed, there are three main types of trends: short-term, medium-term and long-term. Generally speaking, a short-term trend refers to a stock price fluctuation trend of less than a month, usually represented by 5-day and 10-day lines. The medium-term trend refers to the stock price fluctuation trend of more than one month and less than half a year, and the commonly used ones are the 20-day line and the 60-day line. The long-term trend refers to the trend of stock price fluctuations for more than half a year, and the commonly used ones are the 120-day line and the 240-day line.
The standard of moving averages
1. It can reflect the average cost of the moving average. For example, the 10-day moving average is the average cost calculated to reflect the closing price of 10 days, and if the stock price is above the moving average, it means that the last 10 days of buying are profitable, and vice versa.
2. Moving averages can help with bullishness. In many cases, it is necessary to dig deep into the details of the moving average in order to estimate the future moving average trend based on the stock price and time.
3. The moving average can be associated with certainty. The trend of the long-term moving average is not known all at once, so the certainty of the long-term moving average is greater than that of the short-term moving average, and the certainty is higher.
The three mantras of moving averages
1. The devil's line is flat, and there is no market for the time being
For investors, the devil's line refers to the 20-day moving average in the short term. If the 20-day moving average is flat in the rising channel, it means that the main force enters a short-term strategic adjustment, and there will not be much fluctuation in this time period.
In the downward channel, if the 20-day moving average is flat, it means that the market has entered a downward trend, and briefly enters a downward strategic adjustment atmosphere.
2. The decision-making line is flat, and there will be a market soon
For investors, the decision line refers to the 60-day moving average in the medium-term line. Mainly for the opening up and then flattening the decision line, this strategic adjustment is generally maintained in 3 to 5 months, if the currency price 60-day moving average flat, proof that the time has been more than 3 months, indicating that the market is coming, which is called soon to have a market.
3. Quarterly online upside, large-band market
The quarterly line is also known as the institutional moving average, the market is not at the beginning, it is necessary to exchange time for space, and the price is pressed in a small range to slowly consume the patience of retail investors, which takes more than a quarter of time, the quarterly line is flattened to indicate that the main low-price reduction has been almost preliminarily completed, and then it is a large shock in the retail chips in the field, while sweeping the scattered chips outside the market, so as to reduce the resistance for the later pull, leaving a firm will to hold a position.
These formulas are based on the simplified expression of the moving average theory, and the actual operation still needs to be combined with other technical analysis toolbox market conditions to make a comprehensive judgment.
Well, that's all for today's content sharing! Happy learning! See you next time!