Moving averages (SMA and EMA)
Smoothed price. They show trend direction and act as dynamic support and resistance.
What it is
A simple moving average (SMA) is the average of the last N closes. An exponential moving average (EMA) weights recent prices more, so it reacts faster. Popular settings: 9 and 21 for fast trends, 20/50/200 for the broader picture.
When price is above a rising average the trend is up; when the fast average crosses above the slow one it signals momentum turning up. In a trend, pullbacks to the average are common entries.
How to use it
- Pick two or three averages and keep them.
- Trade in the direction of the slope.
- Use pullbacks to the average as entry zones with a rejection candle.
- Avoid averages in ranges: crossovers whipsaw.
Common mistakes
- Treating a crossover as a standalone entry.
- Using ten averages at once.
- Using averages to predict tops and bottoms (they lag).
Practise it in TradeDesk X
The chart has 20/50/200 moving averages, zones around them and an EMA toggle for each, plus Wide zones. The Micro cockpit uses EMA 20 and EMA 50 and an EMA-based 1-minute trend filter.
Related lessons
Playbook: trend pullback
Join an established trend on a shallow pullback to value.
📈Trendlines and channels
Connect the swing lows to measure a trend and spot when it weakens.