Medium-Term Trade Strategy

Medium-term 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 upwards Stock Indices trend the 50 period MA will act as a support, 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 Trade Strategy Examples

In a down Stock Indices trend the 50 period MA will act as a resistance, 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 - Indices Trade 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 Indices moving average. If the market stays above this 50 day Indices moving average moving average, that is a good signal. If the market drops below the 50 day Indices moving average in heavy volume, then watch out, because there could be Stock Indices trend reversal signal ahead.

A 50 day MA Indices indicator takes 10 weeks of 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 Indices MA. This tells you the current market direction is trending upwards. You always want to trade with the Stock Indices trend, and not against it. Many traders only open orders in the direction of the market trend.

Indices prices normally will find support over & over again at this 50 day 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 trend moving down to its 50 day line, they see it as an opportunity, to add to, or begin a new trade position at a reasonable level.

What does it mean if your price moves downwards & slices through its 50 day line. If it happens on heavy volume, it's a strong 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 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.