Sri Lanka Equity Forum
Dear Reader,

Registration with the Sri Lanka Equity Forum would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
Sri Lanka Equity Forum

Discussion Forum for Stock Market Investors in Sri Lanka

සිංහල පරිවර්තනය

Latest topics

» Political instability???
by Yahapalanaya Today at 6:18 pm

» SL has negative outlook as of January 2018 - Moody’s
by samaritan Today at 5:02 pm

» Wiser's TA Chart Room
by wiser Today at 2:47 pm

» Sri Lanka’s USD500mn development bond oversubscribed
by ranferdi Today at 1:09 pm

» CITH AMALGAMATION....
by Miss-Sangeetha Yesterday at 6:26 pm

» Don't Go to LB Finance...LEE BONNA FINANCE...
by venura Yesterday at 5:44 pm

» HVA getting ready once more
by anjelo Yesterday at 1:23 pm

» BERU.N0000
by lakmal87 Wed Jan 17, 2018 11:48 pm

» sira.......2.40/=
by TuTanKaman Wed Jan 17, 2018 2:32 pm

» TIME TO BUY KZOO.........
by max shanu Wed Jan 17, 2018 1:05 pm

» ALHP WILL MOVE UP SOON
by wisdom79 Tue Jan 16, 2018 10:01 pm

» RAL.N at Rs2.40
by lakmal87 Tue Jan 16, 2018 7:04 am

» ONLY GOODNESS OF YAHAJADAAPLANAS
by Ryan Hudson Tue Jan 16, 2018 5:50 am

» Pan asia power PAP
by Ran49 Mon Jan 15, 2018 8:11 am

» Lanka Cement
by Ran49 Mon Jan 15, 2018 8:09 am

» CTBL-Rights
by ruwan326 Fri Jan 12, 2018 11:57 am

» US revamps travel warning system; SL gets an okay
by TraderCSE Fri Jan 12, 2018 8:07 am

» What do you expect in CSE performance prior to LOCAL GOVT.ELECTIONS?
by ONTHEMONEY Thu Jan 11, 2018 10:35 am

» best stocks to buy now
by ranferdi Thu Jan 11, 2018 8:49 am

» FATAL ATTRACTION??????????
by samaritan Wed Jan 10, 2018 11:13 am

» CFT share එක මොනව හරි දෙයක් වෙනව වාගෙ.
by 2017 Cse Tue Jan 09, 2018 11:02 pm

» Treasury posts Rs22bn primary surplus in Budget, first time in 63 years
by kovida Tue Jan 09, 2018 4:23 pm

» UNION BANK (UBC)
by peiris Tue Jan 09, 2018 2:42 pm

» FUTURE GEMS - Kind help
by Elahara Mon Jan 08, 2018 10:47 am

» Perpetual Treasuries to get a most of Treasury Bill-Bond Business of New Government?
by ranferdi Mon Jan 08, 2018 8:22 am

HashFlare

You are not connected. Please login or register

Sri Lanka Equity Forum » Stock Market Charts & Graphs » Chart Pattern - The Moving Averages

Chart Pattern - The Moving Averages

View previous topic View next topic Go down  Message [Page 1 of 1]

1 Chart Pattern - The Moving Averages on Sun Apr 24, 2011 8:01 pm

Quibit

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
[You must be registered and logged in to see this image.]

Moving Average is a technical indicator and is used to identify the trend in price movements. The prices of a security are averaged over a period of time and the averages keep on moving with the addition of each new day's price. Moving average could be calculated for any period of your choice depending on your requirement and this is depicted by a trend line.

As for example, if you are looking at a 9 day moving average, you will add the first nine days' closing prices (day 1 - day 9) and divide it by nine (no. of days). That will give you the first point of the Moving Average line. The second point is calculated by adding the closing prices of 2nd to 10th day and dividing it by nine. The process will continue with each new day's price being added to the calculation while the foremost day's price being removed from the calculation. This process will smooth out the day to day price movements of the share and provide the general trend of the price movement.

Longer the period of the moving average the more smoother the price movement is and each new day's price being added would have a lesser impact on the trend. As such, the extreme ups and downs in the price of a share are smoothed out leaving the general trend. If you are interested in the longer term price trend of a share you can select a longer time period like 100 days. On the other hand if your concern is short term price movement you could look at, say, a 15 day moving average.

The above explained Moving Average is called an Arithmetic Moving Average. Another form of moving average is Exponential Moving Average and is calculated by adding a certain percentage of yesterday's moving average to a percentage of the today's closing price. This way you can place more value on the current price than the past data.

Signals from Moving Average

When you look at this graphically, if the price is below the Moving Average line, it is an indication of bearish behavior for the length of the trend and vice versa. Further, if the price is moving from above the Moving Average to below it then it is a bearish indication of the price trend for the time being considered and vice versa. It is important to note that this is a lagging indicator, meaning it will only signal the trend after it has actually starter and as such is a conformational tool.

Another way to generate signals from the Moving Average is to draw two moving averages with two time periods: one for a longer period than the other. Then look for crossover points to help identify periods of significant price changes. Let's look at this graphically.

[You must be registered and logged in to see this image.]

BUY/SELL signal

When a shorter term moving average (18 day Moving Average) crosses from below to above a longer period moving average (50 day Moving Average) it is a bullish signal. That is the trend will be upward and gives a BUY signal. On the other hand, if a shorter term Moving Average crosses down from above a longer term moving average it is a bearish signal and the trend will move downward. This is a SELL signal.

It is considered that the longer the Moving Average (i.e. longer the period) is the more reliable the signals will be and shorter the Moving Average is there will be more false signals or whipsaws. We will also remind you to consider other factors surrounding the company before taking the final BUY or SELL decision.

Sri Lanka Equity Analytics
www.srilankaequity.com

2 Re: Chart Pattern - The Moving Averages on Tue May 01, 2012 1:47 pm

K.Haputantri

avatar
Co-Admin
Thank you GMNET for your contribution.

3 Re: Chart Pattern - The Moving Averages on Tue Dec 06, 2016 10:03 pm

jehovah

avatar
Equity Analytic
Equity Analytic
thanks..

View previous topic View next topic Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum