Exponential Moving Average(EMA)

The exponential smoothing moving average is significantly different from the simple moving average and the weighted moving average in that the price is calculated by retroactively averaging the price. Exponential smoothing moving averages are used for MACD and so on.

The closing price is generally used for the price, but the opening price, high price, and low price may be used. The moving average period is generally 20 days, but shorter ones are more sensitive and longer ones are less sensitive. The “Granville’s Law” is famous, which is a typical moving average with two moving lines, one with a long period (long-term line) and the other with a short period (short-term line).

Buy Signal

• When the long-term line has leveled off (rise) from the long-term decline and the short-term line has surpassed the long-term line
• When the short-term line falls below the long-term line while the long-term line is rising
• When the short-term line has fallen toward the long-term line while the long-term line is rising, but it starts to rise again without falling below the long-term line
• When the long-term line is descending and the short-term line is falling far away

Sell Signal

• When the long-term line has leveled off (down) from the long-term rise and the short-term line has broken below the long-term line
• When the short-term line exceeds the long-term line while the long-term line is descending
• When the short-term line has risen toward the long-term line while the long-term line is descending, but it starts to fall again without exceeding the long-term line.
• When the long-term line is rising and the short-term line is rising far away

See more technical indicators