Exponential Moving Average

Similarly to the weighted moving average, the exponential moving average applies more weight to recent prices, but in a complex way that uses historic data. I’ve added a 10 day exponential moving average EMA(10) in green to the chart above, and just show part of it here enlarged so that the difference is clearer –

As you would expect, with the recent information being more important, the EMA follows the price a little more closely, and this is most noticeable at changes in direction.

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