#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.