A moving average is a technical analysis indicator that smooths out price data by creating a constantly updated average price. It helps to identify trends by filtering out short-term price fluctuations, making it easier to see the direction of an asset’s movement over a specified period. Common types include simple moving averages (SMA) and exponential moving averages (EMA), each calculated differently to emphasize recent prices to varying degrees.
Context
In cryptocurrency analysis, the moving average is widely used to determine support and resistance levels and to generate buy or sell signals. Traders frequently observe crossovers between different moving averages, such as the 50-day and 200-day moving averages, as potential indicators of significant market shifts.
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