A moving average is a simple way to soften the price over time. Moving averages are the sum of the closing prices of a currency "x" divided by the number of periods.
Like any indicator, the moving average is useful to predict future prices. Only by observing the behavior of the moving average graph one can predict the trend.
There are several types of moving averages, and generally a greater period of time will smooth the curve of the graph.
simple moving average (SMA).
A simple moving average is based on an "x" number of periods. Ex: They take the last 10 days of closing, then summed and divided by 10, and gives us an average. Then we do same two wings 11 to 1 days and divide by 10 having the above. Then from 12 to week 2 ... Most softwares do the math, but it is important to understand the concepts behind each indicator.
The following chart shows different types of moving averages and how smooth the curve.
The red line is 10 times
yellow line 30 times
blue line 50 periods
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