📖Market Viewing Knowledge—MA
1. The Nature of MA
- MA (Moving Average) is a statistical tool that averages the stock price (index) within a certain period of time and connects the average values at different times to form a curve. For example, the 5-day moving average is an average value obtained by adding the closing prices of the last 5 trading days and dividing it by 5. As the trading days go by, the new 5-day average values are continuously calculated and connected to form a 5-day moving average.
2. Single MA line observation
- Trend judgment: If the MA line is tilted upward, it means that the stock price is in an upward trend for a period of time. For example, when the 30-day MA line is upward, it means that the average price of the past 30 trading days is rising, and the stock may be in a medium-term rising market. On the contrary, if the MA line is tilted downward, it is a downward trend.
- Support and pressure effect: When the stock price falls back to the vicinity of the MA line, the MA line may play a supporting role. For example, if the stock price falls to the 60-day MA line and can stabilize and rebound, it means that the 60-day MA line supports the stock price, and investors will pay attention to whether this support is effective to judge the subsequent trend of the stock price. Similarly, when the stock price rises near the MA line, the MA line may become a pressure line, hindering the further rise of the stock price.
3. Comprehensive observation of multiple MA lines
- Combination of short-term and long-term MA lines: Short-term and long-term MA lines are usually observed at the same time, such as 5-day MA and 20-day MA. When the short-term MA line (such as 5-day MA) crosses the long-term MA line (such as 20-day MA) upward, this is called a "golden cross", which is a relatively positive signal and may indicate that the stock price will enter a rising stage. On the contrary, when the short-term MA line crosses the long-term MA line downward, it is called a "death cross", which may be a signal of a falling stock price.
- Arrangement of MA lines of different periods: If the short-term MA line is at the top, the medium-term is second, and the long-term is at the bottom, and all three lines are upward, this is a long arrangement, indicating that the stock is in a strong rising stage. For example, if 5-day MA>10-day MA>30-day MA and all three lines are upward, the market sentiment is high and the bulls are dominant. On the contrary, if the long-term MA line is at the top and the short-term MA line is at the bottom, and all three lines are downward, it is a short position arrangement, indicating that the stock is in a downward trend.
