Important Stocks To Watch - Stocks At Or Near 50 MA, 200 MA, Chart Patterns

How To Use The 200 Day Moving Average

The 200 day moving average is another very important moving average because it is observed by almost all traders. Whether a stock is above or below its 200 MA brings great significance. Most traders and investors will rarely touch a stock that is below its 200 MA. Before you continue, do take a read of the article how to use the moving average to analyze stocks if you haven't read it.

The 200 MA As Support

Surprisingly, the 200 MA can act as a very good support. Since this moving average is watched by so many people, it sometimes can be a self fulfilling prophecy. Stocks tend to bounce off the 200 MA.

The 200 MA As Resistance

The 200 MA can also act as a resistance. A stock tends to find it difficult to rise above a declining 200 MA.

The next time you see a stock approaching its 200 MA, take note. You might find it reverse when it hits the 200 MA. Some traders even create trading strategies which employ the 200 MA.