A simple moving average is a very popular technical indicator. It provides a smoothed out picture of price action. Simple Moving averages give the average price over a set number of periods. For example let’s say the close prices for GBP/USD over the last five days were:2.00, 2.01, 2.04, 2.02 and 2.0350

The 5 day Simple Moving Average would add all those prices together and divide by 5. This would give us (2.00+2.01+2.04+2.02+2.0350)/5=2.0210

In this example, the Simple Moving Average is using the close price. Whilst the close price is most commonly used, you can use the open, low or high instead.

Here is a 10 period Simple Moving Average, notice how it smoothes out price action: