200-Week Moving Average Heatmap
Represents the average of the closing prices over the last 200 weeks, which corresponds to approximately 4 years.
200-Week Moving Average Heatmap
What is the 200-Week Moving Average Map?
The 200-week moving average calculates the average of prices over the last 200 weeks. Each week, this average is updated by removing the previous week's data and adding the new week's data. This aims to show the general trend of prices over time.
WMA200 = (P1 + P2 + P3 + ... + P200) / 200
Such long-term moving averages typically provide more reliable signals as they are filtered from short-term fluctuations.
What is the Purpose of the 200-Week Moving Average?
- Trend Following: The 200-week moving average is typically used to determine the long-term trend of an asset. If the price stays above the 200 WMA, it generally indicates an upward trend. Conversely, if the price falls below the 200 WMA, it may indicate a downward trend.
- Support and Resistance: The 200 WMA can be considered an important support or resistance level. When markets move close to these levels, traders can make buying or selling decisions by monitoring these levels.
- Risk Management: Investors can rebalance their portfolios based on where the price intersects with the 200-week moving average.
The 200-week moving average helps analyze the general trend and market direction by taking the average price of an asset over the last 200 weeks. This calculation is commonly used in financial analysis and allows investors to evaluate the market from a broader perspective.
