A moving average shows the average price of an asset over a chosen period. By smoothing daily fluctuations, it makes the underlying trend easier to see.
Instead of reacting to every price swing, moving averages help investors focus on direction. When price stays above the average, momentum is usually positive. Below it, momentum weakens.
Moving averages are typically assessed by:
- Simple Moving Average (SMA): Average price over a fixed number of periods
- Exponential Moving Average (EMA): Gives more weight to recent prices
- Price crossing above or below the average
- Short-term averages crossing long-term averages
Common periods include 50-day and 200-day averages.
A common mistake is treating moving averages as precise entry signals. They lag price and confirm trends after they start.
Another error is using them in sideways markets. When price chops around, moving averages can generate frequent false signals and increase volatility exposure.
On Stoxcraft, moving averages appear on stock pages within the technical analysis section.
They also feed into internal Stoxcraft Scores as part of broader trend and momentum assessments, helping contextualize price behavior. Moving averages are further referenced in Academy content explaining trend, momentum, and how technical indicators are used to interpret market structure.
