Moving Average Moving average is a trend-following indicator.

Its purpose is to detect the start of a trend, follows its progress, as well as to report its reversal if it occurs.

The direction of the moving average conveys important information about prices. A rising moving average shows that prices are generally increasing. A falling moving average indicates that prices, on average, are falling. There is falling moving average which indicates prices are falling. A bearish signal is generated as prices move below the moving average. As the prices crosses under the moving average, it signals the start of a downward trend and hence it constitutes a selling signal.

Bollinger Bands Bollinger Bands are used for studying the volatility and share price behavior. The price action of action of an issue becomes volatile or becomes bound into a tight trading pattern.

There is a

downtrend, the price moves between the moving average and the lower Bollinger band. Whenever price reaches near to lower Bollinger band, there was uptrend. We can see that as stock price is near the bottom, signal was to buy.