The Exponential Moving Average (EMA) is used to quickly detect market trends as it plots a line showing the direction of the market.
The EMA is more precise & accurate than the SMA because it assigns greater priority/weight to recent price & less priority to older price; resulting in a more precise line.
When the price is above the EMA line the market is in an uptrend & when the price is below the EMA line then the market is in a down trend.
The drawback of the EMA is that it’s a little bit too sensitive thus it plots every change on the charts including noise. The EMA should therefore be used alongside an SMA so you can compare differences.
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