| The key difference between an exponential moving average (EMA) and a simple moving average (SMA) is that an EMA gives more weight to recent prices, while an SMA gives equal weight to all prices in the period being considered. This means that an EMA will respond more quickly to price changes than a SMA, making it a more sensitive indicator of trend. A bullish EMA crossover occurs when the shorter-term EMA crosses above the longer-term EMA and is seen as a signal of a potential uptrend. A bearish EMA crossover occurs when the shorter-term EMA crosses below the longer-term EMA and is seen as a signal of a possible downtrend. |
Moving Averages - Technical Analysis from A to Z