Indicators
EMA & Moving Averages: Identify Trends
5 min read•Trading Reference Guide
What is EMA?
Exponential Moving Average (EMA) is a technical indicator that smooths out price data by giving more weight to recent prices. Unlike a simple moving average, EMA reacts faster to recent price changes.
Why Use EMA?
1. Trend Identification - EMA slopes upward in uptrends, downward in downtrends
2. Entry/Exit Signals - Price bouncing off EMA = trend strength
3. Cross Signals - Fast EMA crossing above slow EMA = bullish; below = bearish
4. Support/Resistance - Price often uses EMA as dynamic support/resistance