Moving Average
A moving average smooths price into a single line by averaging recent closes, making the underlying direction easier to see. Simple and exponential versions are the most common, with the exponential type reacting faster to new prices. Traders use moving averages to define trend, to locate dynamic support and resistance, and to time pullback entries.
Full explanation
Popular settings include the 20, 50, 100 and 200 period averages, each describing a different horizon. Price above a rising average suggests an uptrend; crossovers between a fast and slow average are used as trend-change signals, though they lag by design. Moving averages perform well in trends and poorly in ranges, where repeated crossovers generate false signals, so they work best combined with structure and volatility context.
Why traders watch it
A moving average turns noisy price into a clear bias, which keeps you trading with the dominant direction instead of guessing at every wiggle.
Related indicators
ATR (Average True Range)
ATR, or Average True Range, measures the average distance a market travels over a chosen number of periods, including gaps. It is a pure volatility reading with no directional bias. Traders use ATR to set stop distances that respect normal noise, to size positions consistently, and to judge whether current conditions are unusually quiet or unusually fast.
Breakout
A breakout occurs when price moves decisively beyond a defined level such as a range high, trendline or consolidation boundary. It signals that the balance between buyers and sellers has shifted and can start a sustained move. Breakouts also fail often, so traders look for confirmation through follow-through, expanding range and a successful retest of the broken level.
Momentum
Momentum describes how strongly price is moving in one direction. Strong momentum suggests buyers or sellers remain firmly in control and that a move is likely to continue. Weakening momentum, where each push travels a shorter distance than the last, often warns that a slowdown, pause or reversal is approaching even while price is still rising or falling.
Pullback
A pullback is a temporary move against the prevailing trend before it resumes. It gives trend traders a lower-risk entry than chasing an extended move, because the stop can sit behind nearby structure. The judgement is always the same: is this a pause within a healthy trend, or the start of a genuine reversal?