The 200-day moving average (DMA) is widely acknowledged as an indicator to determine the overall trend by market participants. Simply put, this average assists in identifying a bullish and bearish sentiment for an index or a stock. One can even consider taking a medium-to-long term position in an index or a stock with the help of 200-DMA.
If price of the stock or an index consistently trades above the 200-DMA, it can be viewed as an trending upward. Markets or stocks that consistently trade below their 200-DMA are seen to be in a downtrend.
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