Weighted moving average that gives more weight to recent bars. Reacts faster than SMA to new information.
EMA(t) = C(t)·k + EMA(t−1)·(1−k), where k = 2 / (N+1)
Trend-following crossovers (EMA 9 / EMA 21), pullback entries in an uptrend when price returns to a rising EMA.
Still a trailing indicator. Fast EMA settings amplify noise; slow settings still lag turns.
Nifty 50 daily bars with Exponential Moving Average (EMA) pre-loaded:
3 strategies use Exponential Moving Average (EMA):