Exponential Moving Average (EMA)

The Exponential Moving Average (EMA) is similar to the SMA but gives more weight to recent prices. This makes it more responsive to new information, which is why it's used in the MACD calculation (12-period and 26-period EMAs).

• Faster reaction to price changes compared to SMA of the same length.
• More popular for short-term trading where speed matters.
• The MACD indicator uses 12 and 26-period EMAs as its foundation.
• EMA crossovers (e.g., 8 EMA crossing 21 EMA) are common short-term trading signals.