Technical analysis is the study of price and volume patterns to understand market psychology and forecast trends. Among the tools available, moving averages stand out for their simplicity and power.
A moving average smooths out a stock’s daily price noise so you can easily see how it’s trending—up, down, or staying flat. When the price stays above a long-term moving average such as the 200‑day, it’s considered a sign of strength; when it falls below, it may signal weakness.
There are two main types: the simple moving average (SMA), which gives equal weight to each data point, and the exponential moving average (EMA), which gives more weight to recent prices. Shorter-term averages (like the 20‑day EMA) react quickly to price changes, while longer-term averages (50‑ or 200‑day SMAs) provide a broader view. Traders often watch where price sits relative to these averages to judge momentum and trend direction.
Moving averages also act as dynamic support and resistance because traders expect them to, creating a self‑fulfilling prophecy: if everyone thinks price will reverse at a certain moving average, it probably will because traders place buy and sell orders there. The 20‑day EMA may provide immediate support, while the 50‑day or 200‑day averages signal longer‑term reversals.
At Foreshadow AI, moving averages are just one part of the picture. Our proprietary system analyzes EMAs and SMAs across multiple timeframes, monitors volume spikes, detects golden and death crosses, and weights each factor to produce a single BUY/SELL/NEUTRAL signal with a confidence score. These signals are deterministic—calculated from market data (no hallucinated numbers), then delivered via Telegram. As a Pro or Elite member you can choose exactly which alerts to receive, toggling daily, hourly, or five‑minute signals on or off. Combined with proper risk management, technical tools like moving averages can help traders stay on the right side of the market.
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