Chapter 14. Moving Averages
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
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 ...