Moving average
A moving average smooths price over time. It helps read the trend direction and dynamic support/resistance zones — it does not predict the move itself.
Definition
A moving average smooths price over a time window — it helps you read direction and dynamic support/resistance zones. SMA and EMA differ in how much weight they give to more recent prices; both lag the market and neither predicts the future.
Example
On the H4 chart price is above the MA200 and pulls back to the MA50 within an HH/HL structure. Your plan: go long only on a reaction that matches your rules, with a stop below the swing — the MA is a location filter, not a signal in itself.
Anti-example / common mistake
Buying every bounce off the MA20 on the M1 chart. The shorter the period and the timeframe, the more false signals you get. Optimising the MA length on a single bull run is a classic overfit.