20-Day, 50-Day and 200-Day Moving Averages Smooth a Price Series

A simple moving average (SMA) smooths the fluctuations on a price chart so you can easily see upside and downside trends.

The 20-day moving average for Phizer (PFE) shows an upside followed by a downside.

The 50-day moving average smooths the price series even more. Notice that the 50-day moving average curve is smoother than the 20-day moving average curve. Also, the peak of the 50-day moving average occurs after prices peak. All moving averages peak after prices peak. Likewise all moving averages bottom after prices bottom.

The 50-day moving average always lags the 20-day moving average. So the 50-day moving average bottoms or peaks after the 20-day moving average bottoms or peaks.

Usually the 200-day moving average is applied to multi-year price sequences.

A close-up view of the 200-day moving average shows that it is very smooth.

The 200-day moving average lags the 50-day and 20-day moving average.