How to Use the 200 Day Moving Average

The 200ma is the granddaddy of all moving averages. As such, stocks that gap just above the (flat) 200ma, regardless of the quality of the gap, generally get bought.

Gaps below a 200ma usually get sold. Similarly, a multi bar drop into a 200ma often stops the stock dead in its tracks. One other thing to remember is that while the 20ma is most powerful when it’s trending, the 200ma is most powerful when it’s flat.