Centred Moving average technique is one of the most commonly used techniques for prediction.
Its Logic lies in removing the seasonality of data and generating a smooth trend line.
No that doesn’t mean mean it removes seasonality, what we need to understand is that data=true signal +noise
This noise is nothing the seasonality, cyclical components that we see often in our graph.
Centred moving average technique classifies these two components to make a further accurate forecast.
So lets see, if this was our data
How would we forecast the sales for 2013 quarter 1-4.
As always the next step is visualisation.
Please refer to the link to the excel file below for detailed steps on how i solved it.