A simple moving average indicates the average value of an asset's price - a stock, commodity or index etc over a set time frame --15, 50, 100 or 200 straight days

How Do Analysts Read The 200-DMA?

When an index or a stock closes below the 200-DMA, it is said to be in a long term downtrend until it breaks out above the average. This means a new buyer of the index or stock is willing to pay less than the average price paid in the last 200 consecutive days. When it trades above the 200DMA it is in a long-term uptrend. Technical analysts usually wait for three to five straight days of a stock's or an index's closing below or above the 200-DMA to conclude a trend.

What Does A Fall Below The 200-DMA Mean?

The 200-DMA acts a major support in a bull market and as a major resistance in a bear market. Since it's a long-term average, it helps an investor who holds significant stock portfolios with a long-term outlook. When a market conclusively breaks below or out of its long-term average, it provides a signal to the investor to either buy or sell