50 day moving averages

Moving average indicator

The moving average indicator is one of the most popular tools for technical analysis by traders and investors. Since moving averages smooth a data series, they are very useful to identify trends in the markets, stocks, ETFs, commodities and currencies. Investors use moving averages in themselves and in combination with other indicators such as MACD and Slow Stochastic. The 50-day and 200-day moving averages are the most widely used moving average indicators, as indicating the trend of the underlying security.

The type of moving average indicator used by the investor depends on their advantage. Some investors want a simple moving average, while others use exponential moving averages. They also adjust the time period used for calculating the moving average. Moving averages help to define the trend.
Type of Moving Average

Traders use 5 to 13 day moving average for short-term trends. 25 to 50 day moving averages help in defining the medium-term trend. Long-term trends using moving averages more than 50 days, such as 100, 150 and 200 days. Best moving average indicator depends on your timeframe. If you are a long examination of market cycles, a longer moving average is appropriate.

* Five to twenty or more years. Using monthly time frames.
* One to five years using 200-day moving average. Consider using weekly moving average, too.
* Three months to one year, the 50-day moving average is most useful.
* One month or less, use the 9-day 13 or even 20-day moving average.

Day traders use much shorter time frames, as seen in a minute, five minutes, fifteen minutes and hourly charts.

In addition, check the frequency of inventory cycle. If it cycles every two months, a good moving average will be 20 days. Use a moving average that is half of the cycle length.
Interpreting the Moving Average

Moving average indicators using historical data to help identify and follow the trend. As a lagging indicator, moving averages are able to identify the absolute tops and bottoms or market shares. They are very useful in determining trend.

A downtrend develops when the stock forms a series of lower lows and lower highs. In this case, the moving average will lag over the trend of providing confirmation of a downtrend. From the slope of the moving average points down, it's a good sign of a downtrend. The degree of lag depends on the time period used in calculating the moving average indicator.

The same goes for the stock is trending upward, forming higher highs and higher lows. The moving average will lag under price trend is confirmed as it rises. The slope of the moving average indicator will point up, signaling for the trend.

Not surprisingly, stock trends that Kosovo will have a moving average that reflects this trend. Most trending sideways shares trade within a narrow range. When the stock is the high end of the series will be slightly above the moving average. When the stock is at the low end of the trading range, moving average will be above cost. However, the trend in the moving average is sloping as oscillates up and down. However, this does not happen very often.

The state chart below the S & P 500 shows the 50-day and 200-day moving average over the five-year period.

S & P 500 200 day moving average stock chart

Walking through the scheme in the market rally that began in 2004, the 200-day moving averages have increased at a cost of S & P 500. Even when the S & P fell below 200-day moving average of 200-day, never the slope of the moving average error. This is a good indication that the trend in the S & P 500 have remained.

After 200-day moving average indicator declined by Price, she gave a sign that the market has changed its course and that this trend will be down. The slope of the 200-day moving average turned negative in early 2008. While you will miss the start of the turnaround in the market, the slope changes in the 200-day moving average you would be kept out of the precipitous decline that occurred in the second half of 2008 and early 2009. The bear market ended, when the 200-day moving average indicator turned positive in mid-2009. The new trend is underway, as long as 200-day moving average indicator shows.

The 200-day moving average is not only one used by investors. Depending on your investment of time, you can use much shorter moving averages, too. Those investors have much shorter holding period, you will use 5, 9, 12, 13, 20, 30 and 50 day moving averages and their indicator.

In the example above, we only used the slope of the moving average as an indicator of changing trends. Investors and traders use moving averages and other ways to signal when to buy or sell. Here are some of the methods for applying the moving average indicator:

1st Use the move to price and moving average as a trademark. Buy only when security is above its moving average. Sell ​​when it is below its moving average. Of course, the time period for the moving average will have a significant impact on this policy. Smaller time periods may cause you to trade more frequently.
2nd Use moving averages as support and resistance levels. When the price drops to the moving average, then jumping, it's a buy signal. Here are the moving average acts as support. Should the price fall through the moving average as support act, it is a signal to sell. The chart below JoyGlobal (JOYG) shows how the 50-day moving average acted as support during a rally in share price.
3rd Using two moving averages, each with different time periods. When a shorter period moving average rises through a longer period moving average, it is buy signal. The move to a shorter period moving average down through a long period moving average will sell signal. In the table above, the cross of the 50-day moving average down through the 200-day moving average would work to help keep you out of bear market slightly earlier than the slope change following the 200-day moving average. It also had you enter the market a little earlier, when the bear market ended in June 2009.
4th Using two moving averages. When the shorter moving average period away from longer term moving average signaling security is trending in the direction of moving averages. This is the basis for disapproval Moving Average Convergence (MACD) indicator.
5th Use moving average as a trending indicator with other technical tools such as chart pattern. The example below shows the breakout of an ascending triangle, a bullish pattern. The 50-day moving average is less than the price of the shares, such as transitions from down sloping trend is sloping trend when the breakout occurs, confirming the break.

50-day moving average stock chart
The bottom line

The moving average indicator is one of the most important tools for technical analysts. As with all technical indicators, it is best to use other technical means to verify buy or sell signal. By adjusting the time period of moving average you can use with a very short time frames for a very long ones. The choice of simple or exponential moving average calculation is a matter of preference and what works best for the table is analyzed.

The moving average indicator signals changes in trends, though it is a lagging indicator. As a result, it will always be late. I hope it also will not give you as many false signals. It is best to use a moving average indicator with other technical methods such as chart patterns and technical indicators that provide a good buy and sell signals. The aim is to tip the scale to your advantage, increasing the probabili