Introduction to Moving Averages
What is a moving average, you ask? Well, instead of looking at a jagged chart moving up and down you could choose to smooth out its price movements with a moving average. Therefore, a moving average is derived from the price of a stock over X number of market days.
Moving averages are technical indicators. Thus by definition of technical indicators, it is used to help evaluate the technical movements of a stock in order to predict future movements of the stock.
By averaging out, and therefore smoothing out the movement of a stock price a moving average gives a cleaner view of the overall movement of a stock. The more days used to average out and smooth out a stock chart, the slower that moving average is to react to a stock current price fluctuations.