The 50 day moving average is watched by many traders and investors. Therefore it is considered to be a major moving average. In the previous article, we have discuss about how to use the moving average to analyze stocks. If you haven't gone through it, I recommend you read it. In this article we are going to look at another use of the 50 day moving average.
One of the uses of the 50 MA is its ability to act as a psychological support. It can also be used to point us to real price support. Since the 50 MA is observed by many traders, it is so powerful that on its own it can be support as well.
The 50 MA support does not work all the time but if you combine it with other analysis such as support analysis and indicators such as stochastics, you can have a very high accuracy candidate for a reversal.
The 50 MA can also act as a resistance. If a stock is below its 50 MA and it rises to touch the 50 MA, odds are it may find it difficult rise further.
The 50 MA can be a very reliable support or resistance. Therefore, many traders create trading strategies based on the 50 MA. I also love to trade stocks that are touching their 50 MA.
Dec 03, 18 08:16 AM
With an agreement to pause the trade war, Dow is about to jump 450 points higher, but will this rally sustain and go even higher? Lets take a look at the charts.
Nov 29, 18 07:51 AM
Yesterday we saw a huge big rally 600 ++ points. The question now is this rally sustainable and will we have a beautiful Christmas in the stock market this year. Here are a few things to look out for…
Nov 29, 18 07:35 AM
This sideways movement in the KLCI is really giving investors and traders a headache. What we are experiencing now is a volatility contraction which is often followed by volatility expansion.
Nov 26, 18 08:52 AM
As the techs reach an area of long term support, its going to be a choppy ride as the market decides whether support will hold or the downtrend continues...
Oct 30, 18 06:35 AM
As we close out the month of October 2018, what is in store for us? Let us take a look at the charts and see what they might be telling us.