#LearnAndEarnQuiz Moving Average (MA)
What it is:
A Moving Average (MA) is a technical indicator that smooths out price data over a specific period of time. It helps identify the trend direction.
Types:
SMA (Simple MA): Average of prices over a period.
EMA (Exponential MA): Gives more weight to recent prices.
Example:
50-day MA shows the average price of the last 50 days.
If the price is above the MA, it's generally bullish.
If it's below, it's often bearish.
Why it's important:
Helps you see trends clearly.
Used to find support/resistance levels.
Crossovers (like when 50 EMA crosses above 200 EMA) are strong buy/sell signals.
2. Relative Strength Index (RSI)
What it is:
RSI is a momentum indicator that measures how overbought or oversold an asset is.
Scale: 0 to 100
Above 70 = Overbought → Might reverse or pull back.
Below 30 = Oversold → Might bounce or recover.
Why it's important:
Helps spot potential reversals.
Good for timing entry/exit points.
Very useful in sideways (non-trending) markets.
Why They're Important Together:
MA tells you the trend direction (e.g., up or down).
RSI tells you when to enter or exit based on strength/weakness.
Example Strategy:
If price is above 50 MA (uptrend) AND RSI is around 30–40, it's a potential buy opportunity.
If price is below MA and RSI is above 70, it may be time to sell.