An Intro to Moving Averages: Popular Technical Indicators
Over the last few articles, we have covered many of the basics of technical analysis, mainly chart types and pattern recognition. Having laid the foundation, it is time to move on to a more involved discussion and delve into the core of technical analysis—indicators—and how they are used in the analysis process and in the development of systematic trading strategies. To get things started, we will begin with one of the more basic, yet quite popular, indicators—moving averages.
Moving averages are among the oldest and most widely used technical analysis tools. Due to the relative ease with which they are calculated, moving averages are the preferred tools of newcomers to technical analysis. They have also found favor among some fundamental analysts who make decisions on fundamental factors such as earnings and sales but use moving averages to time buy and sell decisions. With the wide availability of computers and their increased use in financial analysis, you can now create moving averages covering several decades worth of data in a matter of seconds.
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