What EMA shows
The average price of the last N candles, with recent candles counted more. Popular lengths are 9, 21, 50 and 200.
Indicator guide · Moving averages
Exponential Moving Average (EMA): what it shows, settings and how to read it.
The average price of the last N candles, with recent candles counted more. Popular lengths are 9, 21, 50 and 200.
How it is calculated
Each new value is the latest close multiplied by a weight of 2 / (N + 1), plus yesterday's EMA multiplied by the rest. The newest candles therefore count the most and old ones fade out gradually.
Usual settings
9 and 21 for short-term trades, 50 for the medium trend, 200 for the long-term trend.
How traders read it
Price above a rising EMA suggests an uptrend; below a falling EMA, a downtrend. A fast EMA crossing a slow one (9 over 21) is a classic trend signal.
Where it fails
In a sideways market EMAs cross back and forth and give many false signals.
What to combine it with
RSI or MACD to judge momentum, and a longer EMA (such as the 200) as a filter so trades are only taken in the direction of the bigger trend.
Try EMA on a live chart
Sign in, open Genni Charts, press the "ƒx Indicators" button above the chart and choose EMA. Click its name on the chart to change the settings. It is free for every member.
More in "Moving averages": SMA · WMA · HMA · VWAP · All 25 indicators
Questions
Frequently asked questions
What is the EMA indicator?
The average price of the last N candles, with recent candles counted more. Popular lengths are 9, 21, 50 and 200.
What are the best settings for EMA?
The usual settings are: 9 and 21 for short-term trades, 50 for the medium trend, 200 for the long-term trend. No setting is best in every market, so test a change on past data before relying on it.
Is EMA reliable on its own?
No single indicator is. In a sideways market EMAs cross back and forth and give many false signals. Most traders use it together with: RSI or MACD to judge momentum, and a longer EMA (such as the 200) as a filter so trades are only taken in the direction of the bigger trend.
How do I add EMA to a chart for free?
Sign in, open Genni Charts, press the "ƒx Indicators" button above the chart and choose EMA. Click its name on the chart to change the settings. It is free for every member.
This page is education, not investment advice. Trading involves substantial risk of loss. Read next: Trading indicators · Trading strategies · Candlestick patterns