Option Investor
Glossary

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Daily Moving Average (DMA)

A closing price average based on a specified period of time, i.e., 10-dma, 30-dma, 200-dma, etc. The daily moving average will take the current day into account and the first day will be dropped from the average. This average can help determine various levels of either support or resistance, depending upon where the stock is trading in relation to the average price. For example, if a stock is trading right around $54 and it's 10-dma is at $50.25, technical analysts may look to this level to provide support should the stock pull back, particularly if the stock has tested and held support at its 10-dma before. The same can be true for resistance if the stock is trading below this level. Moving average indicators can also be valuable in identifying changes in trend. (see also Moving Average)