EMA (Exponential Moving Average)
Moving average giving more weight to recent prices — reacts faster than SMA.
EMA (Exponential Moving Average) is a type of moving average giving exponentially more weight to recent prices, unlike SMA which treats all prices equally.
Most commonly used EMA combinations:
•EMA 9 + EMA 21 — short-term signal (day trading)
•EMA 50 — medium-term trend, key support/resistance
•EMA 100 + EMA 200 — long-term trend (gold cross, death cross)
Signals:
•Golden cross — EMA 50 crosses above EMA 200 (bullish long-term signal)
•Death cross — EMA 50 crosses below EMA 200 (bearish signal)
•Price above EMA 200 = bullish zone, below = bearish zone
EMA vs SMA:
•EMA reacts faster to price changes — useful for trading
•SMA is smoother, less "noisy" — useful for identifying long-term trend
Recommendation: Use EMA 21 and EMA 50 for entry signals, EMA 200 for bias (bullish or bearish).