TradingMarkets Chart of the Day
Today’s chart of the day focuses on moving averages.
Almost every person trading on a computer uses moving averages to determine the
major points of support and resistance for stock price. The two most
popular moving averages are the 50-day simple moving average and the 200-day
simple moving average.
Citigroup
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PowerRating) has been seeing a lot of action around its 50
and 200-day moving averages. On May 24, the stock found major support at
its 50-day average, which then led to a small, two point rally. On June
13, the stock broke through support at the 50-day, but held at the 200-day.
After a few weeks of consolidation, Citigroup tested resistance at the end of
June, and finally closed above its 50-day on July 6. After looking at this
chart, we can see that
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PowerRating) has some upside potential, considering the stock
has broken through resistance and is fighting to establish a new uptrend.
Citigroup closed at 49.08 on Friday July 7, just 2 cents above the average.
Considering the force these moving averages have been exerting, look for this
stock to hold its ground above 49.06.
Using moving averages in your trading can greatly improve your
trading results. By knowing the major points of support and resistance,
you will give yourself an edge by having a good sense of the overall direction
of the stock’s trend.
John Patrick Lee