Simple Moving Average
period = 20 (2–200) Overview
The Simple Moving Average (SMA) is the most basic and widely used moving average in technical analysis. It calculates the arithmetic mean of prices over a specified number of periods, creating a smooth line that helps traders identify the overall direction of price movement while filtering out short-term fluctuations.
By giving equal weight to all data points within the calculation period, the SMA provides a balanced view of recent price action. Popular periods include the 50-day SMA for medium-term trends and the 200-day SMA for long-term trends, making it an essential tool for trend-following strategies.
Interpretation & Trading Signals
Price Crossover Signals:
- Price crosses above SMA: Bullish signal - consider going long or closing shorts
- Price crosses below SMA: Bearish signal - consider going short or exiting longs
- Multiple touches: SMA often acts as dynamic support in uptrends, resistance in downtrends
Moving Average Crossovers:
- Golden Cross: 50-day SMA crosses above 200-day SMA - major bullish signal
- Death Cross: 50-day SMA crosses below 200-day SMA - major bearish signal
- Volume confirmation: High volume on crossovers strengthens the signal reliability
Trend Identification:
- Rising SMA: Indicates upward momentum and bullish trend
- Falling SMA: Indicates downward momentum and bearish trend
- Flat SMA: Suggests consolidation or range-bound market
- Distance from SMA: Large gaps often indicate overbought/oversold conditions
Example Usage
Code examples will be available once the Rust implementation is complete.
Performance Analysis
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