Today we learn about moving averages: in the Candlestick Chart, MA represents the moving average, and the other numbers indicate the number of days for the moving average.

Different uses of moving averages:

5-Day Line (Attack Line): If the 5-Day Line is trending upwards and the stock price breaks above the 5-Day Line, the short-term outlook is bullish. Conversely, if the 5-Day Line is trending downwards and the price breaks below the 5-Day Line, the short-term outlook is bearish.

10-day line (short-term stop-loss line): The 10-day line serves as a short-term stop-loss line. When the stock price in an uptrend falls below the 10-day line, it is believed that there is currently no upward momentum.

Medium-term Moving Average

20-day line (important medium-term support and resistance line): The 20-day line acts as support or resistance.

60-day line (Lifeline): 3-month average line, generally breaking below or above indicates a long-term downward or upward trend.

Long-term moving average

120-day moving average (half-year line): used for long-term trend assessment.

250-day line (Bull-Bear dividing line): Above the 250-day line is considered a bull market, while below the 250-day line is a bear market.

The role of the moving average:

1.
Determine the trend: All short-term moving averages diverging upwards indicate a short-term bullish trend, with upward momentum, bullish outlook.

2.
Conversely, if the short-term moving average is pointing down, it indicates a bearish sentiment.

Support and Resistance:

Moving averages are often used as support and resistance. When the stock price is above the five-day moving average, the five-day line acts as a support level, indicating a short-term bullish outlook. Conversely, when it is below, it serves as a resistance level, indicating a bearish outlook.

Trading Signals (Single Indicator is Unreliable)

When the 5-day line crosses above the 10-day line to form a golden cross, the upward momentum is strong (bullish). Conversely, it forms a death cross when the 5-day line crosses below, indicating strong downward momentum.