StockYanWhat is a moving average?
A moving average is the average closing price over the last few days, worked out again every day. A 20-day average adds up the last 20 closes and divides by 20.
On a chart it becomes a smooth line that follows the price. When the price is above the line, the recent trend is up. When it is below, the trend is down.
SMA: the simple average
SMA means Simple Moving Average. Every day in the window counts the same.
It is steady and easy to understand. The trade-off is that it is slow to react when the price suddenly changes direction.
EMA: the faster average
EMA means Exponential Moving Average. It gives more weight to recent days, so it turns sooner when the price changes direction.
The cost is more false turns. A short EMA can flip back and forth when the market moves sideways.
Which one to use
Neither is better in every case. Short-term traders often prefer EMA because it reacts sooner. Longer-term investors often use SMA because it is calmer. The length you choose matters as much as the type.
- 9 to 20 days: the short-term trend
- 50 days: the main trend
- 200 days: the long-term trend
Moving averages as support
In an uptrend, the price often dips back to a rising moving average and then moves on. Many traders watch the 20-day or 50-day average as a moving support line. In a downtrend, a falling average often acts as resistance.
Golden cross and death cross
When a faster average crosses above a slower one, it is called a golden cross. When it crosses below, it is called a death cross.
Crossovers come after the move has started, so they confirm a trend more than they predict one. In a sideways market they can give many false crosses.
Watch out for bonus shares
A bonus book closure lowers the share price in one day. On raw prices, the moving average then sits far above the price for weeks and can show a false death cross.
StockYan's indicators use prices adjusted for bonus and right shares, which avoids this.
A NEPSE example
On 27 Oct 2026, Nabil Bank (NABIL) closed at Rs 542. Its 9-day EMA was Rs 540.76 and its 20-day EMA was Rs 536.93.
The price was above both lines, and the faster line was above the slower one. StockYan's EMA scanner had marked a golden cross between these two averages on 10 Sep 2026, 47 days earlier.
The gap between the two lines was small, about 0.7%. That points to a steady trend that was not racing ahead.