Trend and moving averages

Exponential Moving Average (EMA)

EMA is an average of closing prices that gives more weight to recent candles, so it reacts faster than a simple moving average.

How to read it

  • Price above a rising EMA suggests an uptrend; below a falling EMA suggests a downtrend.
  • Popular lengths: 9 and 21 for short-term, 50 for medium, 200 for the long-term trend.
  • A crossover (for example 9 EMA crossing above 21 EMA) is a common trend-change signal.

Settings

Any length. 20 and 50 are common on daily charts; 9 / 21 on intraday.

Example rule to test

Rule to test: buy when the 9 EMA crosses above the 21 EMA, sell when it crosses back below.

Common mistake

Using moving-average crossovers in a choppy market, where they give many small losses.

Try it free on iTradeChart

For learning only. Backtests use past data and do not guarantee future results. Not investment advice.