Moving Average

A moving average is the simplest possible smoothing of price, and everything it can tell you is contained in the prices it averages — its value is legibility, not information. The window length is the only real decision: short windows track price closely and generate frequent signals, long windows lag heavily and generate few. Because it lags by construction, a moving average cannot mark a top or bottom, only confirm that one has passed. Popular lengths such as 50 and 200 have no special property beyond being widely watched, which makes their apparent significance a coordination effect.