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How do I analyse moving averages?
One could use technical indicators in any number of ways...they aren't rigidly defined for use in any particular way.  If they were, only computers would use them. Having said that, moving averages are frequently used by people operating on the assumption that short-term price movements will soon be reverted back to a longer-term mean.  So if the price shoots up today, traders who use moving averages may believe it will come back down pretty soon.  If this is the belief (and it usually is for this type of trader), a price significantly above a moving average could indicate an overpriced stock.  A price below the moving average could indicate an underpriced stock. Similarly, a short-term moving average above the long-term moving average may indicate an overpriced stock.  When you are dealing with more than one frequency, though, there is more disagreement about how to use technical indicators.  Some traders would probably say the opposite: that a short term average above the long term average indicates an upward movement that will continue because they believe the stock has momentum. Note that I am not saying I believe in using these averages to predict mean reversion or momentum effects, just that traders who rely on moving averages frequently do.