The moving average is an indicator reflecting the average price over a given period.

There are different types of moving averages but the most commonly used are the arithmetic moving averages, the exponential moving averages and the weighted moving averages.

Note : The mathematical formulas of these moving averages are described in Wikipedia.

According to the investment horizon, the period used will be :

Between 5 and 13 days (very short term).
Between 14 and 25 days (short term).
Between 26 and 49 days (medium term).
Between 49 and 100 days (long term).
Higher than 100 days (very long term).

Purchase signal

The price is increasing and crosses the average mobile.
A short term moving average is increasing and crosses a long term moving average.

Sale signal

The price is decreasing and crosses the moving average.
A short term moving average is decreasing and crosses a long term moving average.

Notes

The signal is linked to the horizon of the moving average (short, medium or long term).
If the moving average has been in the past a strong resistance, his crossing is a strong signal.