One of the most obvious uses of SMAs is the detection of a trend reversal. A trend reversal happens when a short term SMA crosses over a longer term SMA. For example, if a 20 day moving average was, previously, above a 200 day moving average, but has crossed over the 200 day and is currently below the 200 day then the security has performed a 'death cross' and the trend is for lower and lower prices.

Stockcharts.com has excellent 'chart school' for the beginning chart user. They also provide excellent charts.

I like to use a 20 day SMA, a 200 day SMA, and a 21 day EMA.

One of the most obvious uses of SMAs is the detection of a trend reversal. A trend reversal happens when a short term SMA crosses over a longer term SMA. For example, if a 20 day moving average was, previously, above a 200 day moving average, but has crossed over the 200 day and is currently below the 200 day then the security has performed a 'death cross' and the trend is for lower and lower prices.

Stockcharts.com has excellent 'chart school' for the beginning chart user. They also provide excellent charts. Here is a link:

http://stockcharts.com/school/doku.php?id=chart_school

I like to use a 20 day SMA, a 200 day SMA, and a 21 day EMA.