📊 Charts & Technical Analysis · Lesson 6 of 9 · 9 min
Moving Averages
🌊 A stock chart is mostly noise — random jitters that mean nothing. A moving average is the noise-cancelling headphones that finally let you hear the actual trend.
💡 Key idea
A moving average smooths price into a trend line. Golden cross (50 over 200) = bullish; death cross = bearish.
🧠 Why it matters
A MOVING AVERAGE (MA) plots the average price over the last X periods, smoothing daily noise into one flowing line. The 50-day and 200-day MAs are the famous ones. Price above its MA = generally an uptrend; below = generally a downtrend. Two signature signals: a GOLDEN CROSS (50-day crossing ABOVE the 200-day) is bullish, and a DEATH CROSS (50-day crossing BELOW the 200-day) is bearish.
🌍 In the real world
💡 The 200-day moving average is watched by basically everyone — which is exactly why it matters. It often acts as major support or resistance simply because so many traders are staring at the same line and acting on it.
📌 Takeaways
- A moving average smooths price into a clean trend line
- Above the MA = uptrend bias; below = downtrend bias
- Golden cross = bullish, death cross = bearish
📖 Terms in this lesson
Moving average: The average price over the last N days, drawn as a line to smooth out the noise.
✅ Test yourself
What does a moving average do?
- Predicts the future exactly
- Smooths price into an average trend line
- Counts volume
- Sets the price
Answer: B · Smooths price into an average trend line
It averages recent prices to filter noise and reveal the underlying trend.
A GOLDEN CROSS is when...
- The 50-day MA crosses above the 200-day
- Price hits zero
- Volume spikes
- The 50-day crosses below the 200-day
Answer: A · The 50-day MA crosses above the 200-day
50-day crossing above the 200-day is the bullish 'golden cross.'
Why does the 200-day MA matter so much?
- It's legally required
- So many traders watch it that it becomes self-fulfilling support/resistance
- It's always exactly right
- It sets interest rates
Answer: B · So many traders watch it that it becomes self-fulfilling support/resistance
Its power comes from how many people watch and act on it — crowd behavior again.
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