Definition and Meaning of 100-Days Moving average

The technical indicator of price movements is the moving average. These are the average closing prices for stocks over different periods of time, from long term to mid-term to short-term. Based on the information investors wish to draw about prices, there may be a 200-day or 100-day moving average. The 100-day Moving Average is the average closing price of the past 100 days or 20 weekly. It shows price trends over the medium-term.

The Importance and Usefulness of a 100-day Moving average

Investors can see the stock's performance over the past 20 weeks, and determine if the trend is upward or downward. This moving average over 100 day helps them to do this. They can also get a sense for market sentiment.

It is easy to calculate a moving average. Add up all the closing prices for each day (day 1+day 2,+ day3...day N) and divide that sum by the number days. For 100 days, the MA value for n is 100.

Clear view of a Price Action

Stocks are volatile securities whose prices can change daily and even minute-to-minute. A moving average has one main purpose: it helps to separate the noise from the daily price movements and gives you an indication of where stock prices might be heading. When average closing prices are taken into account, the impact of daily price movements can be analyzed.

Medium-Term Price Analysis

The 100-day moving average of stocks will give you a better picture of the medium-term. The MA trend line moving up strongly indicates that overall stock prices are rising, but it could also indicate that prices may be nearing their peak and that trend reversal may soon occur. The trend line moving down sharply may indicate that prices are declining. Prices may soon bottom out before recovering. If the trend line moves sideways, it is usually an indication that prices are in a range.

Market Sentiment

The market sentiment can be viewed through moving averages. The market is bullish if the securities prices trade higher than the 100-day average. A bearish market is one where the prices trade below the moving average. Different MAs can indicate different price directions. Crossover MA trading strategies are used by investors to consider multiple MAs at once. If a shorter moving average (say 50 days MA) crosses over a longer-term MA, such as a 200-day MA, it indicates bullish sentiment. A bearish market sentiment is indicated if the shorter moving average falls below the longer-term MA.

100 Day Moving Average As Support and Resistance

Investors also use 100-day MA levels as support and resistance levels. Investors may place limit orders to purchase a stock when stock price falls below the support level that is on the moving average for 100 days. This happens before the MA trend line bounces off. This moving average could also be a resistance level where traders can place sell-limit orders. The MA doubles as a ceiling for stock prices, before sell-limit orders can be triggered.

Conclusion

The direction in which prices are moving is indicated by the 100-day moving average. It is possible to identify stocks with a 100-day moving average that has been performing well over the long term and make trading decisions.