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200 Day Moving Average – It’s Importance and the Magic That Keeps Happening

Discussion in 'Technical Analysis' started by shabbir, Apr 22, 2018.

  1. shabbir

    shabbir Administrator Staff Member

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    The 200-day moving average commonly expressed as 200DMA is a very popular and widely accepted technical indicator among traders to analyze the underlying trend.

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    shabbir, Apr 22, 2018
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  2. bhat64

    bhat64 Apprentice

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    Bhai why we don’t see the magic in 10,50,100 DMA? Any data points there you can share? And why 200 why not 400 etc?


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    bhat64, Apr 24, 2018
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  3. vjx

    vjx Member

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    Yes, it is one of the widely used indicator. So, it can be a good support level. I was told that it can be considered as yearly average as there are around 200 trading days in a year. Some use 240 days to be more precise. Also, some use EMA instead of DMA to factor in recent price changes.
    A good company mostly if not always stays above 200DMA/EMA. If the price is over extended in either direction of the 200DMA/EMA, can be considered for reversals.

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    vjx, Apr 24, 2018
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  4. shabbir

    shabbir Administrator Staff Member

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    Because those aren't widely used and so people don't start covering up their positions or start building and so magic doesn't happen. Something like why we close the market before 4PM. The reason is people who traded in those early days wanted to go back home and so they can if market closed early. Not valid anymore but is being followed for decades.

    Similarly nothing significant about it exists but is followed.
     
    shabbir, Apr 25, 2018
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