Technical analysis is a trading tool that used to scrutinize securities as well as an attempt to forecast their future movements by analyzing trading activity statistics such as volume and price fluctuations. Where fundamental analysts attempt to evaluate the intrinsic value of a security, technical analytics view charts of price movements and forecast future price movements through many analytical tools to evaluate a security"™s strength or weakness.
Moving Averages are prominently used technical indicators that smooth out price action by filtering out random price fluctuations. It"™s a trend-following (lagging) indicator as it is based on past pricing. The two basic Moving Averages are the simple moving average (SMA), the simple average of a security over a defined number of time, and the exponential moving average (EMA), which gives more prominence to recent prices. The most common reasons why MAs are used are to determine support and resistance levels and to identify trend direction.
Though MAs are useful on their own, they also lay the foundation for other indicators such as the Moving Average Convergence Divergence (MACD). Gol Linhas Aereas Inteligentes S.A. (GOL)"™s 1-Month Moving Average is 16.1, while the 3-Month Moving Average is 13.99.
Average Volume is the amount of securities traded in a day on average over a specific time period. Trading activity relates to the liquidity of a security. When average volume is high, the stock has high liquidity and can be therefore easily traded, while conversely, when the trading volume is low, the commodity will be less expensive as traders are not as willing to purchase it…