Moving Averages and their importance

[tu]

I used to think that all moving average patterns were just lagging indicators that simply followed a securitys' price action with all the humps and bumps along the way.

I never really realized how important they were until coming to this site, specifically these forums.

Using IFLI as an example for this discussion, I was initially intrigued by the movement of the MA lines in the weekly chart in relation to the price action. I've seen this unusual pattern a few times here and wanted to understand what it meant.

Why do the MA lines move straight across without a bump yet the price action is moving down?

The only thing that I can guess is that the stock still has a strong positive stabilizing strength behind the scenes even though it's moving down.

Back in 2006 and 2007 of this chart, a similar action had taken place. And WOW what an increase! From around the 20 cent area to the 17 DOLLAR area. In the weekly chart, it was almost as if the straight MA200 was used as a springboard to make a jump higher.

On the daily chart, we have a gradual sloping action taking place with the MAs almost perfectly in sinc with each other in a straight sloping parallel formation.

Doc said parallel MAs are a good indicator. Do the straight lines on a gradual slope mean less resistance points are being created for an easier breakthrough later on?

[Dr PennyStock]

The MA50 and the MA200 are very important indicators and also resistance and support points, the reason why a MA doesn't move even if you see a 50% fall or run up, it's very easy, if the line is the moving average of the last 50 days, it will incorporate the ups and downs very slowly, because as the name indicates, it is an average, the average try to stay always in the middle of the price movements, one more reason to move very slowly.

They are very important because they have a psychological effect, when a stock breaks the MA200, this is a very strong long-term buy signal, an MA50 is more a short or middle-term buy signal.

[Dunadoni]

Doc,

Some days ago I posted on a dutch site that the MA(200) for PEIX was at 1,27.
But an other guy told me that the MA(200) was at 1,24, So I checked his source and saw that he choosed different range then I did. I do use your chartpattern from stockcharts with range "fill the chart".
So my question, is there a rule which range you have to choose, because I think the other guy is wrong with his 1,24.

[Dr PennyStock]

Doc,

Some days ago I posted on a dutch site that the MA(200) for PEIX was at 1,27.
But an other guy told me that the MA(200) was at 1,24, So I checked his source and saw that he choosed different range then I did. I do use your chartpattern from stockcharts with range "fill the chart".
So my question, is there a rule which range you have to choose, because I think the other guy is wrong with his 1,24.

The MA200 is not affected by the range, unless you switch to weekly, there, the MA200 is the moving average of the 200 weeks, not the 200 days, so your chart is correct.

Use always stockcharts.com, they are the best charts on the internet.