Exponential Moving Average (EMA)
Moving average that weights recent closes more heavily via an exponential multiplier, reacting faster to price changes than the SMA.
Formula
EMA = Priceₜ × k + EMA_prev × (1 − k), where k = 2 / (n + 1)
The EMA applies a smoothing factor k = 2 / (n + 1) to give recent bars exponentially more influence. A 12-period EMA reacts much faster to new data than a 12-period SMA because bars from two weeks ago carry a fraction of a fraction of their original weight.
EMAs are the building block of MACD, and traders commonly stack two or three (e.g. 9, 21, 55) to read trend direction from their order and the gaps between them. During strong trends, price tends to "ride" the faster EMA without crossing it.
Related Terms
Elder Ray Index
Measures the power of bulls (high minus EMA) and bears (low minus EMA) relative to an exponential moving average to gauge trend and momentum together.
AdvancedKeltner Channel
Volatility envelope using a 20-period EMA as midline and ATR multiples (typically 2×) as upper and lower bands.
IntermediateMACD
Trend-following momentum indicator built from the difference between a 12- and 26-period EMA, with a 9-period signal line and histogram.
BeginnerParabolic SAR
Trend-following stop-and-reverse indicator that plots dots above (downtrend) or below (uptrend) price, accelerating as the trend matures.
IntermediatePrice Oscillator
Percent difference between two moving averages of price; equivalent to MACD scaled by the longer MA so it is comparable across different-priced assets.
IntermediateSimple Moving Average (SMA)
Arithmetic mean of the last n closing prices — the simplest smoothing tool and anchor for countless other indicators.
BeginnerTRIX
Momentum oscillator showing the percent change in a triple-smoothed EMA; the extra smoothing filters minor fluctuations and cycles below the signal period.
IntermediateWeighted Moving Average (WMA)
Moving average that linearly weights recent closes more than older ones — more responsive than SMA but smoother than raw price.
Beginner