SMA in action can be seen by observing the 200 day SMA of $NVIDIA(NVDA)$ . This long term average is an indicator for assessing the overall health & direction of a major trend, filtering out short term price volatility to provide a smooth, clear signal to long term investors.
Throughout 2025, Nvidia's share price experiences significant day to day and weekly fluctuations. However a long term investor using the 200 day SMA would have a clear simple strategy:
When the stock price remains consistently above the 200 day SMA , it is considered to be in a strong bullish upward trend. The SMA acts as a major long term support level.
The 200 day SMA ignores minor dips & temporary pullbacks, preventing investors from panic selling based on short term noise.
In 2025 Nvidia's price remained above its 200 SMA for most of the year. This shows how SMA is used to confirm an upward trend.
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