On the other hand, moving averages can also serve as support and resistance levels. When the price drops near a certain moving average, it may act as support, preventing the price from falling further or even causing a rebound; when the price rises near the moving average, it may become resistance, stopping the price from rising further.

However, moving averages are not infallible; they have a certain degree of lag, so they should not be relied upon solely for investment decisions. Other technical indicators and fundamental analysis should also be considered.