What are moving averages primarily used for in data analysis?

Moving averages are primarily employed to provide an overall impression of data over time. By averaging a set number of data points from a time series, moving averages help to smooth out fluctuations and highlight longer-term trends or cycles in the data. This is particularly useful in financial and operational contexts where noise and volatility can obscure underlying trends.

While moving averages can provide insights into general movement and tendencies in the data, they do not predict sudden market changes, identify seasonal trends, or calculate exact future values. Instead, their strength lies in their ability to clarify the motion of data over a defined period, allowing analysts to make more informed decisions based on historical patterns.