Moving Average

Moving average is used in technical analysis to smooth out volatile market activity within a trend. This eliminates the noise caused by short term fluctuations on shorter time periods and focuses on a more stable looking trend vectors on a longer term perspective. The sensitivity of a moving average depends on the filter used. It is derived by adding up a series of closing prices and dividing it by a specified time period for example, the average closing prices on a 5 minute time block of of a stock price ranging from 100.10, 100.15, 100.30, 100.33 and 100.40 is 100.256.

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