How to Use Moving Averages to Confirm a Trend

The use of moving average varies from trader to trader. Some use it to determine support and resistance. 
   

The 50-day moving average line is widely used to determine support and resistance.  
       

  

Others use it to time their entry.They look for a convergence between two moving averages. The most commonly used moving average lines are: 50-day moving average and 20-day moving average. Price tends to go up when 20-day moving average crosses 50-day moving average in an upward manner.

Some traders use volume to confirm their trade. They only buy when a convergence is followed by a surge in volume.

For me, I only use moving averages to confirm trends. 

As a momentum trader, I demand that a stock should be trending up for at least a month. 

To confirm an uptrend, I use the following moving average lines: 200-day MA, 100-day MA, and 50-day MA. The criteria are as follows:

• The 200-day moving average is pointing upward.
• The 100-day moving average is above the 200-day moving average.
• The 50-day moving average is above the 100-day moving average.
• The current price should be above the 50-day moving average.       

  
Spotting an uptrend is just the first phase of my trading strategy. Not all stocks that are trending up are considered buy candidates—they must also possess good fundamentals. 

"An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force."
-Isaac Newton