A line that averages recent closes with more weight on the newest ones, so it follows price changes faster than the simple moving average.
- Weapon tier
- Standard
- Slots used
- On chart 1/6
Concept
Exponential Moving Average is an average of the last 20 closes, but it does not count every candle equally: the more recent the candle, the more it counts. So when the price changes direction, it turns sooner than Simple Moving Average.
It is drawn as a single line on the price chart. A close above the line means the price is trading above its recent average; a close below means it is trading below.
- Exponential Moving Average
Charts by TradingView Lightweight Charts™
80 candles with the exponential moving average line and volume. In the first part the price falls and closes stay below the line; at candle 60 (arrow) the close rises above it. After that the line turns up and the price climbs above it. Keyboard: ←/→ to move, +/− to zoom, 0 to see the whole chart.
After the arrow candle the closes stayed above the line and rose. This chart, however, was chosen as a scene where the price rose after crossing. It is just as common for the price to cross above and then fall back below soon after. Drag the chart sideways with a finger or the mouse to move it, and pinch with two fingers to zoom in. With a keyboard, click the chart, then use ←/→ to move and +/− to zoom.
How it is calculated
The first value starts as the simple average of the first 20 closes.
From then on, each candle updates the average as “new close × weight + previous average × (1 − weight)”, with weight = 2 ÷ (20 + 1). The new close counts a lot, and older closes gradually fade.
With the same period it stays closer to the price than Simple Moving Average and turns faster.
Parameters
| What it sets | Name in the game | Default | Range |
|---|---|---|---|
| Candles to average (the smaller, the faster it hugs the price) | period | 20 | 2 – 200 |
Trading ideas
Crossing above the line: when the close has been below the line for a while and then rises above it, it is commonly read as a sign that the recent trend is starting to change. The chart on this page shows that scene.
Slope of the line: a rising line suggests an uptrend and a falling line a downtrend. When the price dips toward a rising line and then climbs again, some read it as a pullback within the trend.
Common traps
- In a sideways stretch the price crosses the line back and forth often. Buying and selling at every cross piles up losses.
- Following quickly also means reacting quickly to noise. A very short period produces more false signals.
- The chart on this page was chosen as a scene where the price rose after the signal. Read it together with the trend (lesson 2) and volume.
In the game
- “Exponential Moving Average” is a “Standard” weapon and uses 1 “On chart” line (limit 6).
- Together with the two Simple Moving Average lines in the starting setup (2 lines), it uses 3 lines, leaving 3 free.
Related indicators and lessons
- MACD — A trend indicator that uses the gap between a fast and a slow exponential moving average to show whether the two averages are pulling apart or closing in.
- Ichimoku Cloud — A trend indicator that uses five lines and a cloud to show at a glance where the price sits within its past price range.
- Pivot Line — An indicator that uses the previous candle’s high, low and close to set five reference lines (Pivot, R1, R2, S1, S2) for the current candle in advance.
- DMI — A trend indicator that shows, as two lines side by side, the force pushing highs higher (+DI) and the force pushing lows lower (−DI).
- Parabolic SAR — An indicator that uses a single trailing “stop line” to show whether the price is in a rising or a falling stretch, and when it flipped.
- Aroon — An indicator that judges whether a new trend has started by how long ago the recent high and low were made.
- Supertrend — A trend indicator that keeps a single line above or below the price and uses its color and position to show whether the price is in an uptrend or a downtrend.
- MA Golden Cross — An event marker that puts a vertical line on the candle where the short moving average crosses up through the long one.
- MA Dead Cross — An event marker that puts a vertical line on the candle where the short moving average crosses down through the long one.
- ADX — An indicator that shows, as a number from 0 to 100, how strongly the price is moving in one direction, whether up or down.
- 3. Moving averages
- 2. Trends and sideways moves