In trading circles, much is made of the move of the longer term averages to below "200 DMA" or the 200 day moving average. So what is it?
Firstly, the moving average (MA) is a "technical" term — meaning, something that derives from the price or volume alone, not looking at the underlying fundamentals of a company. Prices, after all, are the only real indicator of what has happened, and prices are driven quite by sentiment —sentiment that is recognizable in patterns in traded prices. Technical analysis is just the field of understanding such patterns.
A moving average help us smoothen daily price changes to give us a picture of a trend and context. Mathematically a moving average is simply the average of the last "n" days; so a 200 day moving average is the average of closing prices of the last 200 days.
source
Firstly, the moving average (MA) is a "technical" term — meaning, something that derives from the price or volume alone, not looking at the underlying fundamentals of a company. Prices, after all, are the only real indicator of what has happened, and prices are driven quite by sentiment —sentiment that is recognizable in patterns in traded prices. Technical analysis is just the field of understanding such patterns.
A moving average help us smoothen daily price changes to give us a picture of a trend and context. Mathematically a moving average is simply the average of the last "n" days; so a 200 day moving average is the average of closing prices of the last 200 days.
source
No comments:
Post a Comment