Stock Indicator: Moving Average (MA) Analysis

The Moving Average (MA) is one of the most commonly used tools in technical analysis. It reflects the average price trend of a stock by calculating the average closing price over a specific period and connecting these averages to form a smooth line. This helps investors identify the trend direction and reduce noise caused by price fluctuations.
1. Basic Concepts of Moving Averages
Calculation Method:
The moving average is calculated by summing up the closing prices over a certain period and dividing the total by the number of periods.
For example: 5-day MA = (Sum of the past 5 days' closing prices) / 5.
Key Period Classifications:
Short-Term Moving Averages: 5-day, 10-day MA (reflect short-term trends and are highly sensitive).
Medium-Term Moving Averages: 20-day, 30-day, 60-day MA (reflect medium-term trends and provide smoother signals).
Long-Term Moving Averages: 120-day, 250-day MA (reflect long-term trends with stronger directional indications).

2. Functions of Moving Averages
Trend Identification

Upward Slope: The price is in an uptrend, with strong short-term support.
Downward Slope: The price is in a downtrend, indicating weakness in the market.
Bullish (Golden) Alignment: Short-term MA is above long-term MA, indicating a strong upward trend.
Bearish Alignment: Short-term MA is below long-term MA, indicating a weak downward trend.
Support and Resistance
In an uptrend, the moving average acts as a support level (price tends to rebound near the MA).
In a downtrend, the moving average acts as a resistance level (price tends to pull back near the MA).
Crossover Signals
Golden Cross: The short-term MA breaks above the long-term MA, signaling a buy opportunity.
Death Cross: The short-term MA breaks below the long-term MA, signaling a sell opportunity.

3. Application Techniques of Moving Averages
Using a Single Moving Average to Determine Trend
When the price is above the moving average, it indicates bullish strength, suitable for buying