In technical analysis, what does a Moving Average indicate about price extremes?

A Moving Average primarily serves as a tool to smooth out price data and filter noise, allowing traders to identify the general direction of a trend over a specified period. While it can indicate price trends, it is not specifically an indicator of price extremes, which typically refer to levels where price may be overbought or oversold.

The correct understanding is that a Moving Average does not directly indicate price extremes; instead, it is more aligned with identifying trends over time. For instance, traders use Moving Averages to determine if the market is in an uptrend or downtrend, as well as to identify support and resistance levels.

In the context of the provided options, the relevance of Moving Averages is more pronounced in indicating prevailing market trends rather than pointing to extremes in price, as it does not inherently signal when prices are at their highest or lowest points. Thus, while the answer suggests a certain focus on extremes, it would not be suitable for a proper identification of the function of Moving Averages in technical analysis.