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Understanding Moving Averages and How to Use

The moving average is an indicator. It shows the average price of the asset as a line next to the chart.

Moving averages belong to the category of trend indicators. These tools help to determine whether the price of an asset is rising or falling at the moment, and to predict where it will go in the future — will it continue to move in the same direction or turn around.

There are several types of moving averages. They differ from each other in the way of calculation, but are used for the same purpose: determine the direction of the trend and find the entry points into the market.

Moving averages are one of the most popular indicators. Many novice traders begin to study technical analysis with them.

In addition, most of the oscillators of other groups of indicators are calculated on the basis of moving averages. Understanding how moving averages work helps you learn how to use oscillators.

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