Moving averages smooth price data to reveal the underlying trend direction by removing day-to-day noise. The two main types are the Simple Moving Average (SMA), which gives equal weight to all periods, and the Exponential Moving Average (EMA), which weights recent prices more heavily. Key moving average lengths carry specific significance: the 20-period MA is commonly used for short-term trend context, the 50-period MA is often treated as an intermediate trend gauge, and the 200-period MA is widely watched as the line separating long-term bullish from bearish regimes. Moving averages also act as dynamic support and resistance levels — in trending markets, pullbacks to the 21 or 50 EMA are common continuation setups. Crossovers between moving averages, such as the golden cross (50 MA crossing above the 200 MA), are classic trend-change signals, though they lag and should be confirmed with price structure.
