SMA-EMA Trading Setup: How Simple Moving Average Helps in Determining Best Stock in Trading?

Simple Moving Average: A Simple Moving Average (SMA) is a popular technical indicator in stock trading that smooths out price data over a given time period to identify potential trading opportunities. It helps traders determine trend direction by acting as support in uptrends and resistance in downtrends.

Trading With SMA

In an uptrend, the SMA can act as a support level, with the price typically bouncing back up after touching it. It can also function as a resistance level in a downtrend, causing the price to fall back after touching the SMA. The Golden Cross is formed when a short-term SMA crosses above a long-term SMA, indicating bullish momentum, and the Death Cross occurs when it crosses below, indicating bearish momentum.

Watch video to know get a more understanding through various examples.