Medium-Term Stock Indices Trading Strategy

Medium term Stock Indices moving average strategy will use the 50 period MA.

The 50 period MA acts as support or resistance level for the Stock Indices price.

In an upward Stock Indices trend the 50 period MA will act as a support, Stock Indices price should always bounce back up after touching the MA. If the Stock Indices market closes below the indicator then this will be an exit signal.

50 Moving Average Period Support - Indices Trading Strategy Examples

In a down Stock Indices trend the 50 period MA will act as a resistance, Stock Indices price should always go down after touching the moving average. If the Stock Indices market closes above the indicator then this is an exit signal.

50 Moving Average Period Resistance - Stock Indices Trading Strategies Examples

50 Day Moving Average Stock Indices Technical Analysis

As the Stock Indices trend moves up, there is a key line you want to watch - this is the 50 day Stock Indices moving average. If the market stays above this 50 day Stock Indices moving average moving average, that is a good signal. If the market drops below the 50 day Stock Indices moving average in heavy volume, watch out, there could be Stock Indices trend reversal signal ahead.

A 50 day MA Stock Indices indicator takes 10 weeks of Stock Indices market data, and then plots the average. The moving line is recalculated every day. This will show the Stock Indices trend - it can be up, down, or sideways.

You normally should only buy when Stock Indices prices are above their 50 day Stock Indices MA. This tells you the current Stock Indices market direction is trending upward. You always want to trade with the Stock Indices trend, and not against it. Many Stock Indices traders only open orders in the direction of the market trend.

Stock Indices prices normally will find support over and over again at this 50 day Stock Indices moving average. Big investing institutions such as mutual funds, pension funds, and hedge funds watch this level very closely. When these big volume entities spot a Stock Indices trend moving down to its 50 day line, they see it as an opportunity, to add to, or start a new Stock Indices trade position at a reasonable level.

What does it mean if your Stock Indices price moves downward and slices through its 50 day line. If it happens on heavy volume, it is a strong Stock Indices signal to sell. This means big institutions are selling their share, and that can cause a dramatic drop, even if fundamentals still look solid. Now, if your Stock Indices price drops slightly below the 50 day line on light volume, watch how it acts in the following days, and take appropriate action if necessary.