Exponential Moving Average (EMA)

An exponential moving average is a price average that assigns greater weight to recent observations, making it respond faster than a comparable simple average.

An EMA smooths a price series while preserving more influence from the latest data, with responsiveness determined by its lookback parameter. Traders compare price with an EMA or compare faster and slower EMAs to describe momentum and trend, including within MACD. Because it is calculated from past prices, it lags abrupt changes and can generate repeated false signals in sideways or volatile markets.