The exponential moving average is a technical indicator used for trading practices to measure trend direction over a time period and reacts more to recent prices.
An exponential moving average, also known as exponentially weighted moving average places higher weightage on the most recent data points. Unlike a simple moving average (SMA), an exponential moving average responds significantly to the most recent behavior of traders.
The 12-day and 26-day EMA are the most popular short-term averages. However, the 50-day, 100-day, and 200-day EMAs are commonly used to gauge long-term trends. The essential message here is that the exponential moving average can respond faster to changes in the price of an asset.
More information in:
- Exponential Moving Average (EMA)
- How Is the Exponential Moving Average (EMA) Formula Calculated?
- Exponential Moving Average (EMA)
- What is EMA in stocks?
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