Trend and moving averages
Simple Moving Average (SMA)
SMA is the plain average of the last N closing prices. The 50-day and 200-day SMAs (often called DMA) are watched widely for the long-term trend.
How to read it
- Price above the 200 SMA is commonly read as a long-term uptrend.
- Golden cross: 50 SMA crosses above 200 SMA. Death cross: 50 SMA crosses below 200 SMA.
- SMAs often act as support in uptrends and resistance in downtrends.
Settings
20 (about a month), 50 and 200 on daily charts.
Example rule to test
Scan idea: stocks where the 50 SMA has just crossed above the 200 SMA (golden cross).
Common mistake
Expecting the price to bounce exactly on the line every time; treat it as a zone.
Try it free on iTradeChart
For learning only. Backtests use past data and do not guarantee future results. Not investment advice.