Moving average

Moving average is a widely used indicator in technical analysis which helps to smooth out price action by filtering out noise from the short term price fluctuation.
Moving average is a trend-following or lagging indicator since it is based on past prices
There are two commonly used moving average;that is;
-Simple Moving Average(SMA)
-Exponential Moving Average(EMA)
Simple moving average is the simple average of a security over a defined number of time periods while Exponential moving average gives greater weight to more recent price.

Moving average have got two main applications,that is;
-To identify the trend direction
-To determine support and resistance level

To calculate simple moving average and exponential moving average,the following formulaes are being considerred;


SMA=A1+A2+A3+.......An
                            n

 where SMA is the simple moving average,A1,A2,A3 the first  ,second and third average while n is the total number of average.


EMAtoday= (valuetoday *(smoothing))+ EMAyesterday*(1-(smoothing))
                                                       1+days                                                        1+DAYS
Here is how the moving average looks like;





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