The Simple Moving Average or SMA is often called the ordinary or simple moving average because it is calculated with the simplest formula in the class.
In this case, the average asset price for the selected period is used.
The SMA helps identify a trend and clearly shows when it will end.
How do I read SMA signals?
The SMA is used both in combination with other indicators and on its own.
If the SMA rise above its average, then the indicator’s ascending movement will continue.
When the chart crosses the indicator upwards from below, it likely signals a rise.
If the indicator falls below its average, this implies a descending trend.
When the chart crosses the SMA downwards from above, it likely signals a fall.
Secrets of SMA indicator
The simple moving average (SMA) is one of the most popular and simplest indicators.
The SMA averages price data and helps reveal trends. Visually, it is a line.
It reliably tracks the chart and, smoothing out random price fluctuations, it shows the direction in which the asset’s value is moving.