Two Moving Averages
The use of a 50-day and 200-day moving average provides many signals of value in trend analysis, even as a combination of lagging indicators. Using this two-part analytical tool has widespread acceptance for confirmation. In fact, “moving averages are considered as more profitable technical trading rules by analysts.... The 50- and 200-day ones provide the most reliable signals.”3
Key Point
The MA analysis consists of observed lagging indicators. Thus, as confirmation for other signals, MA is a strong signal for trend analysis.
The aspects of MA in analysis—specifically the significance of crossover—make this a strong set of signals. MA crossover occurs whenever the fast MA (50-day) crosses over the slow MA (200-day). ...
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