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Moving Averages 101

If you want to come out as the winner in your trading adventure let the charts be your guide. For me the charts biggest translator is the moving average. It works so well because it is based on the one thing that matters the most: PRICE. But it smooths all the price noise into an easy to read format. Instead of processing 10 days worth of price action you look at the 10 day moving average it will show you the direction of the past ten trading days. Instead of trying to predict where you believe something is moving you simple look at what the moving averages are telling you about where it is going now.

The sharpest and best trends in momentum stocks do not close below the 5 day exponential moving average.

The best short plays trend strong enough to find resistance trying to over take  the 5 day ema.

Above the 10 day is a short term uptrend.

Above the 50 day is a bullish indicator.

Below the 200 day is a possible bear market indicator.

The 10 day sma above the 20 day sma is a uptrend confirmation.

The 50 day crossing below the 200 day is a bearish confirmation.

The 50  day crossing above the 200 day is a bullish confirmation signal.

Monster stocks will generally find  support at the 50 day in bull markets.

Monster stocks will generally find support at the 200 day in corrections.
Charts don’t lie.

“Let moving averages be your gurus. -Larry Tentarelli

For my complete Moving Average 101 book click here.