Get started

Exponential Moving Average (EMA)

Choosing the Right Moving AverageMastering Moving Averages: A Comprehensive Guide to Choosing the Right One for Your Trading Strategy Moving averages are among the most widely used technical indicators in trading. They serve as a simple and effective way to identify trends, support and resistance levels, and potential entry and exit points for trades. With numerous types of moving averages available, determining the best fit for your trading strategy can be a challenge. In this comprehensive guide, we will delve into the various types of moving averages, their strengths and weaknesses, and when to use them to maximize your trading profits. Simple Moving Average (SMA) The Simple Moving Average (SMA) is the most basic type of moving average. It calculates the average price of an asset over a specific time period, typically 20, 50, or 200 days. The SMA smooths out the price data by creating a constantly updating average price, providing a clear picture of the asset's direction of movement. I personally use the SMA for long-term trading strategies because it offers a more stable picture of the asset's direction of movement. The SMA is also useful in identifying potential support and resistance levels, which are critical indicators for traders. However, the SMA can be slow to respond to changes in price, which can result in missed opportunities for short-term traders. Advantages of SMA 1. Easy to calculate and understand. 2. Provides a stable picture of the asset's direction of movement. 3. Useful in identifying potential support and resistance levels. Disadvantages of SMA 1. Slow to respond to changes in price. 2. Can lag behind the current price action, leading to missed opportunities. Exponential Moving Average (EMA) The Exponential Moving Average (EMA) is a more complex type of moving average that places greater weight on recent price data. This weighting provides the EMA with a more immediate response to price changes than the SMA, making it a popular choice for short-term traders. The EMA is calculated by taking the weighted average of the asset's price over a specified time period, giving more weight to recent prices. Traders use the EMA for short-term trading strategies because it offers a more immediate response to price changes, which is crucial for short-term trades. The EMA is also useful in identifying potential price reversals, support and resistance levels, and momentum. However, the EMA can be more volatile than the SMA, which can lead to false signals and increased risk. Advantages of EMA 1. Provides a more immediate response to price changes. 2. Useful for short-term trading strategies. 3. Helps identify potential price reversals and momentum shifts. Disadvantages of EMA 1. Can be more volatile than the SMA, leading to false signals. 2. May require more complex calculations than the SMA. Weighted Moving Average (WMA) The Weighted Moving Average (WMA) is another type of moving average that places a greater weight on recent prices. Unlike the EMA, the WMA assigns a weight to each price point based on its position in the time period. This means that the most recent prices receive the highest weight, with each price point receiving a progressively lower weight as you move back in time. Traders use the WMA for short-term trading strategies when they want a more sensitive indicator than the SMA. The WMA is also useful in identifying potential price reversals and support and resistance levels. However, the WMA can be more volatile than the SMA, which can lead to false signals and increased risk. Advantages of WMA 1. Provides a more sensitive indicator than the SMA. 2. Useful for short-term trading strategies. 3. Helps identify potential price reversals and support and resistance levels. Disadvantages of WMA 1. Can be more volatile than the SMA, leading to false signals. 2. equires more complex calculations than the SMA. Smoothed Moving Average (SMMA) The Smoothed Moving Average (SMMA) is a type of moving average that applies a smoothing factor to the price data, resulting in a smoother curve. The SMMA places an equal weight on all price data, with the smoothing factor determining the weight given to each data point. Traders use the SMMA when they want a smoother curve to analyze the asset's trend. The SMMA is useful in identifying potential support and resistance levels and entry and exit points. However, the SMMA can be slow to respond to changes in price, which can lead to missed opportunities for short-term traders. Advantages of SMMA 1. Provides a smoother curve for trend analysis. 2. Useful in identifying potential support and resistance levels and entry and exit points. 3. Less sensitive to short-term price fluctuations. Disadvantages of SMMA 1. Can be slow to respond to changes in price. 2. Not as suitable for short-term trading strategies. Which Moving Average Should You Use? The type of moving average you should use depends on your trading strategy and time frame. If you are a long-term trader, you may want to use the SMA or WMA, as they provide a more stable picture of the asset's direction of movement. If you are a short-term trader, you may want to use the EMA or WMA, as they provide a more sensitive indicator of price changes. Additionally, if you are looking for a smoother curve to analyze, the SMMA may be the best option. It is essential to note that moving averages should not be used in isolation. They should be used in conjunction with other technical indicators, such as oscillators or volume indicators, to confirm potential buy and sell signals. It is also crucial to consider the market conditions, such as volatility and liquidity, when choosing a moving average for your trading strategy. How to Combine Moving Averages for Better Trading Signals 1. Use multiple timeframes: Employing moving averages from different timeframes can help you identify both short-term and long-term trends, as well as potential entry and exit points. 2. Use multiple types of moving averages: Combining different types of moving averages, such as the SMA and EMA, can help you identify trend reversals and filter out false signals. 3. Apply other technical indicators: To confirm the signals provided by moving averages, use additional technical indicators like the Relative Strength Index (RSI), the Moving Average Convergence Divergence (MACD), or the Bollinger Bands. Strengths and Weaknesses of Moving Averages Each type of moving average has its strengths and weaknesses, depending on the trading strategy and time frame. Here is a summary of the main differences between the four types of moving averages: 1. SMA: provides a more stable picture of the asset's direction of movement, but can be slow to respond to changes in price. 2. EMA: provides a more immediate response to price changes, making it a popular choice for short-term traders, but can be more volatile than the SMA. 3. WMA: assigns a weight to each price point based on its position in the time period, providing a more sensitive indicator than the SMA, but can be more volatile than the SMA. 4. SMMA: applies a smoothing factor to the price data, resulting in a smoother curve, but can be slow to respond to changes in price. It is important to understand the strengths and weaknesses of each type of moving average to make an informed decision when selecting a moving average for your trading strategy. Conclusion Moving averages are a powerful tool in a trader's arsenal, but choosing the right type can be challenging. The SMA, EMA, WMA, and SMMA each have their advantages and disadvantages, and the one you choose should depend on your trading strategy and time frame. By combining moving averages with other technical indicators and considering market conditions, you can maximize your trading profits. As a trader with experience in using various technical indicators, I've found moving averages to be quite helpful in identifying trends and potential entry and exit points. However, despite the usefulness of moving averages, I personally prefer indicators that use linear regression. The reason for my preference is that linear regression-based indicators, such as the "Regression Envelope MTF", take into account the slope of the trend, rather than assuming that the trend is linear. This means that the bands will adapt to the slope of the trend, providing more accurate signals in trending markets. For instance, I typically use the "Regression Envelope MTF" (one of my indicators that I have just recently published) on the daily chart with a parameter setting of 250 periods. This allows me to quickly see where the price is positioned relative to the past year's trend. I find this approach to be particularly insightful and beneficial for my trading decisions. Remember to always use caution when trading, and never risk more than you can afford to lose. It is also essential to continue learning and refining your trading strategies to stay ahead of the curve and become a successful trader.
NASDAQ:AAPLEducation
by Julien_Eche
03/04/23 Weekly outlookLast weeks high: $29202.3 Last weeks low: $27844.3 Midpoint: $26486.3 From the volatility of the FED's FOMC announcement, the volatility has continued into last weeks price action in BTC. The 1H 200EMA had price ranging underneath it between the week low and the 0.25 quarter line. Once price had reclaimed 0.25 and had a successful retest, the 1H 200EMA was also reclaimed and a large rally followed. Since then the moving average has acted as support as it did for the previous week, this still remains one of the most important indicators for Bitcoins momentum. With last weeks price action beginning and ending at the midpoint of the weekly range, it's clear that there are slowing momentum concerns. That coupled with the wick up to $29200 to grab liquidity and stop out shorts from the double top of two weeks ago. I do think we are poised to retest 25.2k at some stage or another, it's a very key level that represents the top of the range we spent 9 months in, which is now the floor of our new range that reaches 32.5k. The potential for a bulltrap rally up near the ranges midpoint of 30-31k before retesting 25.2k would be my guess, however it is just that, a guess for now. I would like to see certain structure taking place before entering any trades that follows this narrative. For example an impulse rally above 29.2k that stops out shorts and squeezes higher before rejecting aggressively reaching 30.5-31k, I think this will get enough bulls excited to trap them for the dip down to 25.2k.
by ProR35
Bitcoin on the daily pt.4We have a pivotal moment For BTC, we had a change of character (CHoCH) as well as a break below the diagonal supporting trendline in favour of the bears. With a new Lower Low below the 1D 200EMA needing a reaction off the oversold RSI to stop its decent towards the final target I initially had planned and has shown since the first post on this. A strong reaction brings us back up to the underside of that previous support and now testing resistance. BTC needs to accept over 24k in order to regain any short term hope of bullish continuation. If not, I fear we're setting up to go lower.
INDEX:BTCUSDShort
by ProR35
2
Bitcoin on the daily pt.3We're continuing the downward trend since the double top in the key area swing high range following the prediction path well but ahead of schedule. The 1D 200EMA support has failed for now, it will be interesting to see if the bulls can regain it, I think BTC takes a real tumble down if not as shown in the chart. BTC has broken the diagonal supporting trendline too, I wouldn't be surprised if we saw a retest to confirm both the trendline and the 9EMA as resistance.
INDEX:BTCUSD
by ProR35
13/02/23 Weekly outlookLast weeks high: $23462.5 Last weeks low: $22446.7 Midpoint: $21431 As BTC retraces down through the FVG that I previously stated I had my eye on, price has now hit both 1D & 4H 200EMA and the top of the previous consolidation range. Last week this area is where I stated I would look to do business as it provides decent support on the HTF, making sure the 1D & 4H 200EMA holds is pivotal continuing upward momentum. Personally without any big news events this is a solid place to start building Longs.
by ProR35
ETH/USD: Daily perspective to watch in Ethereum priceIn Daily timeframe, Ethereum trying to break-out the EMA 200 and we see another chance that may to climb to $1,638 USD, but if we break-out this resistance key in this reaction point, we could to see a bulls enter here This look a very interesting that we can to long position in the specify price that I will want in this screenshot in the next analysis of my long position in H2 timeframe I hope that this idea support you and find up news idea to trade crypto!!!
COINBASE:ETHUSDLong
by harisonhbn9718
BTC/USD - is BTC still in a downtrend?Let’s have a look at the BTC/USD 1 week chart and see what this chart and indicators are telling us. BTC is still in a massive Falling Wedge Pattern. BTC is also still in a massive Ichimoku Y-Wave pattern. Note that the 50MA is still traveling DOWNWARDS towards the 200MA so we still might see a Death Cross on this 1 week timeframe. At the moment of typing this, BTC has crossed back under its Least Squares Moving Average (LSMA) on this 1 week timeframe. A successful close below the LSMA and successful re-test as resistance will indicate that the direction of travel will most likely continue downwards. BTC is still way under its Bollinger Bands Middle Band Basis 20 Period SMA on this 1 week timeframe. Looking at the Descending Pitchfork Pattern, we can see the Support and Resistance levels that BTC has been hitting on this indicator. Here is a closer look at this 1 week chart: BTC is still in the Bearish Zone of all 3 of its major Ichimoku Clouds. Looking at BTC’s most important Ichimoku Cloud: The Conversion Line (Tenkan Sen) is indicating that mid-point the short-term momentum is downwards at the moment. The Base Line (Kijun Sen) is indicating that the mid-point of the mid-term momentum is sideways at the moment. The Lagging Span (Chikou Span) is indicating that momentum, at the moment is starting to slope downwards. Using the Negative V Calculation from the 1 Month Chart, and using the Ichimoku Timespan Numbers of 65-Bars and 76-Bars starting from the ATH at $68,789.63 back in Nov 2021, we have 2 potential timeframes for the price target $9,916. V Calculation Negative (from 1 month chart) V = B - (C-B) = D C $25,160 - B $17,538 = $7,622 B $17,538 - (C-B) $7,1622 = $9,916 D1 = $9,916 The week of 6th Feb 2023 D2 = $9,916 The week 24th April 2023 Note that this is NOT a bottom for BTC but is a PRICE TARGET using the Ichimoku V Calculation (Negative). Looking at the Up/Down Volume, we can see that the Volume Traded since around June 2021 has been nothing when compared to what has been previously traded in the past. Looking at the Relative Strength Index (RSI) we can see that the RSI is pointing downwards and still has plenty of room to move downwards before becoming Oversold on this 1 week timeframe. Note that the RSI is getting very close to crossing under is 9 Period EMA. From my opinion, before anyone can start talking or preaching about bottoms, reversals and bull-runs, we need to talk about fundamentals and what is happening to the world economy. We also now know that the Crypto world isn’t yet a hedge against inflation and we also need to accept the fact that the world is already in a recession and possibly heading into a depression in 2023. From my opinion BTC is still in a mid to longterm downtrend. That is NOT going to change unless BTC crosses back ABOVE and more importantly CLOSES ABOVE its 200MA on the 1 Day Chart for Mid-Term and 1 Week Chart for Long-Term. If/when this happens, be on the lookout for any successful re-test as support on these timeframes. Once this world wide recession fully bottoms out be it in 6 months, 1 year, 2 years, 5 years or 10 years and when the powers that be have had their fill of transferring wealth from the Middle Class and the Poor to the elites, then true opportunities WILL ARISE for those who are ready. Again this is all my opinion so I hope this post is helpful.
BITSTAMP:BTCUSD
by TradingThroughTheLens
10
My Price Analysis of LINKBTC on December 10, 2022Hello friends. Today, according to the LINKBTC chart, I noticed that the chart is generally going down and I have drawn the short-term channel in the 1-hour time frame. The formation of EMAs of 50, 100 and 200 assures that the market is bearish. On the other hand, this arrangement is being formed in the 2-hour time frame. On the other hand, the MACD indicator gives a buy signal. My analysis of this signal is that it can either be a fake signal or a short-term signal that will return to its downward channel after encountering the upcoming resistance. and continue its downward trend.
Short
by Saleh_Toodarvari
Everything I've learned about the RSI BINANCE:BTCUSDT In this post, I'll make an attempt to share everything I've learned over the Relative Strength Index (RSI) Over the past 24 months. Nothing described in this post is financial advice, it's just me, sharing thoughts and ideas with you. nb: this post is more suited for traders and investors that are already educated about the RSI Indicators. A brief introduction about the indicator itself : The relative strength index (RSI) is a momentum indicator used in technical analysis. RSI measures the speed and magnitude of a security's recent price changes to evaluate whether it's better to buy, sell, or wait. The RSI is displayed as an oscillator (a line graph) on a scale of zero to 100. The RSI is probably the most used oscillator in finance nowadays, by both retail traders and institutions, hence meaning that when used well , it can be used as a great edge to profitability. RSI popular uses : - An asset is usually considered overbought when the RSI is above 70 and oversold when it is below 30. - The RSI can give us insights on a potential trend's loss of momentum or validity when the price pivots levels are diverging with the RSI indicator (hidden and regular divergences) - The most popular RSI length is 14 periods. My findings 1. Overbought and oversold: myth or reality? RSI's 30 and 70 levels never proved themselves to be a strong enough edge for me to be used as a standalone signal for trade entries. As an example, just look at the irregularity of the results you would get when using just these zones : My take on it is that as a price oscillator when it crosses into extremes, it simply means price momentum is at extreme levels. To me it's basically like a mountain cyclist in the middle of a race: he might very well go faster and higher, however, the quicker and higher he goes the more unlikely he is to keep up with that speed. Eventually, he might either decrease its speed or even go backward. What does this tell us ? The RSI 30 and 70 levels seem to be better used when used as timing indicators. For example, the 70 and 30 levels could be used as a filter for a trader to eliminate market noise when using a trend reversal strategy (mean-reversion). For trend traders, the levels could be used to timing signals where they'll start looking for price to do a pullback (consolidation) to get in the trend. My experience using the 30 and 70 levels as exit signals however has been better (when it comes to using it as the only signal for a trade exit). Say you are long on BTCUSD, in profit, and you get an RSI closure above 70. Well, in that case, you could exit 50% of your position and wait for the oscillator to cross down the 70 levels to exit the rest (as the overbought and oversold zones are rarely a defining factor for trend reversals and corrections). 2. Divergences in the overbought and oversold zones : The lower the time frame you are trading on is, the higher the noise when it comes to divergences, especially with volatile assets such as BTCUSD. So you might want to filter out most of the ones you see to only take the best ones. On the 15M and 5M timeframes, on BTCUSD, I find that on average about 1/3 of the divergences I see play out. However, we are not expected to take every divergence we see. Here's what has helped me get better results with divergences : - When approaching supply and demand zones, especially the higher timeframe ones, we might want to be more aggressive with the divergences we enter into. As the hit rate is not always amazing, the R:R is usually much better, and if the trade works out, it might give you great results which accounts for the low win rate. - If you want to increase your win rate, I also find that going for higher timeframes is usually better when it comes to divergences. - Take only divergences where RSI divergence's first pivot point is over 70 or under 30. Ideally, you don't want the noise to go below 60, or above 40, so that your trade has the necessary momentum to play out. - For extra confirmation, wait for a break of the noise level to enter the trade. - Regular and hidden divergences play hand in hand creating a form of momentum equilibrium. Hidden divergences always create regular divergences and vice versa. Hence a hidden divergence can be considered an early pullback warning to get in a bigger-picture trend. - Regular divergences tend to play out better than hidden divergences. This is especially true when the volume is decreasing, or after a longer period of consolidation when volatility has been contracting and might be about to expand soon. - Regular divergences in strong trends can be both a disaster and a treat. "The trend is your friend". This saying is especially true here. However, 2-3 drives of regular divergences are a great indication of a potential reversal, with enough confirmation factors to produce (often time) a great entry. - The angle of the trend line between divergences pivot points, both on the price chart and the RSI, can be a good indication of the severity of the divergence occurring. - The ideal lookback period for detecting divergences for me has proved to be between 5 and 28 bars. (Below 5 bars is not enough to confirm a true pivot point for me and above 28 bars has probably already played out in past price movements). - Like all edges, using a divergence strategy always produces better results when used in confluence with other signals. I find the best confluences happen when divergences occur: alongside a stochastic cross, near medium-slow moving averages, near horizontal supply and demand zones, alongside volatility expansion, when the volume is decreasing (meaning market makes are in disagreement with the move occurring), near Bollinger bands 2.5 to 3 standard deviations (period 20). - Convergence between your timeframes and higher timeframes is key to understanding how to better choose your trades. Try to play the big divergences but enter smaller timeframes divergences. - When you lose a divergence trade, don't get disappointed. Jump back in because often time, and price will need to do several divergences before getting in your desired direction (however, be careful not to jump in tilt mod. Know your win rate and R:R and keep your money management serious. You'll get blown out if you start tilting on this, especially if you trade reversals with divergences, as it's difficult to get the right timing every time). 3. RSI as a trend filter? - I've found that in trending markets, when RSI's Exponential Moving Average (EMA) crosses above the 50 line, it's an indication of an uptrend and vice versa. However, this is less effective in ranging markets as there's more noise, hence more invalid crosses. - I've found that in trending markets when the RSI line crosses above the EMA (I use a 12 period), it's an indication of an uptrend and vice versa. However, this is less effective in ranging markets as there's more noise, hence more invalid crosses. - As an indication of the trend's direction, I don't find any value in using bullish and bearish control zones. The only use I can find them is when using them for divergence levels filters. This is the end of the first post of this 2 parts series. There's just so much more you can discover about this indicator that it simply cannot be constricted to a few lines of writing. However, you are welcome to take a few of my findings and go test them out using replay and backtesting. See for yourself, and find your balance. Most of my learnings have been made through screentime, trial, and error, backtesting, mistakes, and research. Have a good day, Arthur Girard
Education
by arthurgirard15
NASDAQ 100 PREDICTION FOR 14-11-2022 Dear trader our prediction for today depend on the the chart analysis 1h , d , 15m We find the price had moved up a lot without correction and now it make a consolidate for correction in important resistance the price try to break it many time but can't so if the price still not break this resistance then ,, we advice you to be ready to take short position until next support as you see in the chart Also all the indicators give us same analysis Be careful today the market not clear until now
NShort
by MSD_trading
1
Doge usd prediction 11-11-2022 long 1h , d Dear traders as you see in the chart the is a long opportunity that after a big drop was happened before we see the price it moving up and retest the resistance again the it will moving up again also as you see in daily chart their's a green engulfing candle up the resistance and up the ema line so if the price break red line the price well continue moving up until the resistance,, if not then the price well moving down again ,, Also depend on rsi indecator their's is long signal ...
BINANCE:DOGEUSDLong
by MSD_trading
$NZDUSD | Back To Top Levels?The New Zealand dollar seems to be unphased by the FOMC meeting this afternoon unlike the rest of the markets. Yes it moved up sharply but eventually settled back in its prior position with a little momentum to push back to top resistance points. Let’s zoom in. Several items to note here that are brought to light: – The New Zealand Dollar is currently still above the 200EMA and 365EMA respectively displaying an upward trend which constitutes a BUYing trend. – EXTREME RSI oversold levels reaching 29 and 30 levels displaying almost a double bottom pattern – Multiple broken lower Bollinger Bands instances – Higher highs and higher lows pattern exhibited As soon as I saw this based on my set up rules, this was a natural BUY order for me. My suggestion is to place your take profit should be below the nearest resistance point 0.58660 levels and your stop loss, I’d put under the 200 EMA for good measure near the 0.57990 line. Not financial advice. Hotep & Build (wealth).
Long
by CryptoHotep
XAUUSD - Awaiting for Lower Low CorrectionGold is ready to do a correction of lower low structure. Last week it had tested at 1654 on its lowest point of the year. This week, there will be the FED interest rate decision which will likely push USD value to do higher high, this makes negative correlation to gold. While the USD is raising up, gold will be down accordingly. Referring to Technical and statistics chart. You can see on my chart that all TF referring to Trend Diamond phase (Top right table) are all in down trend. MACD-V momentum is also recently in down-ward. We are waiting for US opening session to see the short term momentum of the market. Currently the strategy of trend following will bring more favourable. However, you need to wait the correction and confirmation from the chart. Gold tried to reach 1680 this morning in Asia session but fail and drop to 1665. Take a look on Daily ATR level it has been test at ATR -50% already and next support zone will be ATR 75% of Sep 19 (1658) Be careful if you open sell position. Try to place the position when the chart is at highest limitation of the day. Similar to buy position, you need to confirm it before place the order and keep in mind that it is the trend contrarian. The economics news this week may bring high volatility to gold. (Last week it was ranging about 80$ while the weekly ATR is about 55$) My sell position is from 1680 which is the level of Support flipped to Resistant zone. My TP is 1654 which is its last lowest point of the year. My Expectation is gold will make Lower low and can be end up of this week on Friday below 1650. See the statistics of monthly chart (bottom right table). In average it moved around 112$ , while in September is has moved only now (High - Low) around 80$ which means there is a possibility to go from 1735 - 112 = 1623$ by end of the month. Just sharing the point of view, not trading advisory.
OANDA:XAUUSDShort
by Riliza
1
RSI Trend Strategy GuidelinesThe RSI is a versatile indicator, and can be used to provide entry signals during a trend. To get the signals a moving average is applied to the RSI. 1. Trades are only taken in the direction of the trend. For an uptrend only take longs. For a downtrend only take shorts (puts). 2. During a downtrend the RSI must move above 60 to indicate a pullback. When the RSI crosses back below its moving average (can be at any number, just as long as the RSI is or was above 60 recently) go short. 3. During an uptrend the RSI must move below 40 to indicate a pullback. When the RSI crosses back above its moving average (can be at any number, just as long as the RSI is or was below 40 recently) go long. 4. Give the price at least two or three bars (whatever time frame you are trading on) or more before considering an exit. This gives the price some time to move in your favor.
BINANCE:ETHUSD.PEducation
by yaser_rahmati