Moving Average/Support/Resistance Example

Here's a great example on how you can use a moving average to watch for trend reversals and to trigger trades in case you don't like drawing a lot of lines on your chart.

In this example, when the 50 Moving Average (MA) crossed the 200MA in May 2019, it signaled a bearish reversal (known as a bearish cross). Later, in November 2020, it crossed again signaling a bullish cross and an uptrend. If you had shorted the stock, you would've gotten around 60% gain.

Now, if I was in this trade right now, it's near a recent high and just poked over a global (weekly chart) resistance line, so if it fails to stay on top of that, instead of turning into support for a continued uptrend, it may stay as a resistance level and begin a downtrend. Watch for consolidation at it's current level and be ready to change your strategy.