#TrendTradingStrategy

Technical traders use moving averages for different types of price information:

Identify the direction of a trend. If a moving average is rising, the stock is likely in an uptrend. If it is falling, it is in a downtrend. If it fluctuates without a clear direction, it is likely a range-bound market ("sideways").

Reduce market noise. Moving averages highlight overall trends while smoothing out short-term price fluctuations.

Searching for support and resistance levels. Some moving averages, such as the 50-day and 200-day, are important psychological levels that traders perceive as obstacles to the continuation of market movements.

Thus, a rising market may encounter selling pressure ("resistance") at a key moving average; a declining market may find buyers who "support" it at one of these averages.