A moving average smooths out short-term fluctuations by continuously averaging price over a defined window, such as the last 50 or 200 periods. As new data arrives, the oldest is dropped, so the average moves along with price. A simple moving average weights all periods equally, while an exponential moving average gives more weight to recent data.
Moving averages are used to describe the prevailing direction and to filter out noise. The relationship between price and an average, or between two averages of different lengths, is often used to characterize trend conditions.
Because it is built from past prices, a moving average is a lagging measure: it confirms what has happened rather than anticipating what will. It is a context tool, and crossovers or touches are observations, not directives.