How to Use the 20-Day and 50-Day Moving Averages: Trend, Support and Crossovers
Moving averages are among the most used technical indicators. This guide explains what the 20-day and 50-day moving averages tell you, how to use them to read the trend and as dynamic support and resistance, and how to read golden and death crosses without getting fooled.
Open almost any candlestick chart and you will see a few smooth lines running through the price. Those are moving averages. They average the closing prices over a period, so you can see at a glance which way price is broadly heading.
What do the 20-day and 50-day averages show?
- 20-day moving average: the average close of the last 20 trading days, about one month, showing the short-term direction
- 50-day moving average: the average of the last 50 trading days, a little over two months, showing the medium-term direction
The fewer the days, the closer the line hugs price and the faster it reacts. The more days, the smoother and slower it is.
Use 1: read the trend
- Price above both averages, with the 20-day above the 50-day: usually an uptrend
- Price below both averages, with the 20-day below the 50-day: usually a downtrend
- Price weaving between the two: usually a range with no clear direction
Trading with the trend usually gives better odds than trying to pick tops and bottoms.
Use 2: dynamic support and resistance
In an uptrend, pullbacks to the 20-day average often find support and turn higher. In a downtrend, bounces toward the average often get pushed back down. Unlike horizontal support and resistance, it moves with price, which is why it is called dynamic.
Use 3: golden cross and death cross
- Golden cross: the 20-day crosses above the 50-day, often seen as a sign of strength
- Death cross: the 20-day crosses below the 50-day, often seen as a sign of weakness
Keep in mind that moving averages are built from past prices, so by the time a cross appears the move is usually well under way. In a range, crosses flip back and forth and are easy to get whipsawed by. It works better to combine them with support, resistance and the overall trend rather than trading the cross alone.
Common beginner mistakes
- Entering the moment price touches the average: it is a reference zone, not an exact level
- Trading crossovers in a range: this tends to produce a string of small losses
- Adding too many averages: the chart gets messy; two or three lines are enough
Borearis analysis pages list the 20-day and 50-day averages and RSI for each market, such as gold, the S&P 500 and USD/JPY, so you can compare them with the current price. For horizontal key levels, see how to read support and resistance. Download the Borearis app to set price alerts.
Borearis Research Team · For information only, not investment advice. Trading involves risk.
