TECH TALK TUESDAY

Let’s look at Moving Averages

Moving Averages, 20 day, Blue and 50 day, Red, as shown here:

        Basically, as long as both the 20 and the 50 are in Sync, the trend continues at least in the Intermediate term.  If I showed a Long-Term Moving Average such as a 200 day, then there would be what we’d estimate to be a base level of support.  Given the 20 and 50 rising, the 200 would not come into play if the close is far above them.  In the case of CCW.V, the 200 dma is at .40, so will become resistance when its approached.  In the case of GGD.TO, the 200 dma is at .34, and so is support far below where it is now.  We have One stock far above support and one stock approaching resistance (the flip side of support).

In the case of CCW.V, with enough energy under it, it will breach resistance and it will become support once it does.

        So, Moving Averages often show direction, and possibly trend.  Should CCW.V breach its resistance at .40 and stay above it, you could easily say it reversed trend and is now headed up.  There is one stock, GGD.TO that is in an uptrend, and one stock that may turn itself into an uptrend.  I use Moving Averages as an advance indicator, to find stocks I want to watch.  If we add back a supporting measure like On-Balance-Volume, they we have more evidence of how the trend might go. 

        Maybe for the next time we will touch on the 200 Day Moving Average, and maybe later or as well, On-Balance-Volume. 

Meanwhile Good Luck.  DG

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