What are Moving Averages?

Moving averages smoothen the current price data to form a trend. Its a lagging indicator They do not predict price direction, but rather define the current direction with a lag. Moving averages lag because they are based on past prices. They also form the building blocks for many other technical indicators and overlays, such as Bollinger Bands, MACD and the McClellan Oscillator. The two most popular types of moving averages are the Simple Moving Average (SMA) and the Exponential Moving Average (EMA). These moving averages can be used to identify the direction of the trend or define potential support and resistance level