How use Moving Averages

A moving average can act as support or resistance. In an uptrend, a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure.
In an uptrend, a moving average may act as support; like a floor, the price hits the level and then starts to rise again. (1)

In a downtrend, a moving average may act as resistance; like a ceiling, the price hits the level and then starts to drop again.


Crossovers are one of the main moving average strategies.

Another strategy is to apply two moving averages to a chart: one longer and one shorter. When the shorter-term MA crosses above the longer-term MA, it's a buy signal, as it indicates that the trend is shifting up. This is known as a "golden cross." (2)

on the other side if the shorter-term MA crosses below the longer-term MA, it's a sell signal, as it indicates that the trend is shifting down. This is known as a "death cross."

The second type is a price crossover (3) which is when the price crosses above or below a moving average to signal a potential change in trend.