Chapter 14. Moving Averages

Chapter Objectives

By the end of this chapter, you should

• Be aware of how moving averages are used to identify trends

• Be able to calculate a simple moving average

• Be able to calculate an exponential moving average

• Be familiar with the concept of directional movement

• Be familiar with the construction of envelopes, bands, and price channels

Chapter Summary

What Is a Moving Average?

A moving average is a constant period average, usually of prices, that is calculated for each successive chart period interval. The result, when plotted, is a smooth line representing successive average prices. Moving averages are one of the oldest tools used by technical analysts and are used to smooth erratic data, making it easier ...

Get Study Guide for the Second Edition of Technical Analysis: The Complete Resource for Financial Market Technicians now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.