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exponential moving average (EMA)

definition

The price-weighted moving average for the price of a security or an index for a given period of time. An EMA differs from a simple moving average in that it attaches more significance to recent data, making it more sensitive to early indications of a change to the current trend. Typically a 26-day or 12-day EMA is used for analyzing short-term trends and a 50-day or 200-day EMA is used for long-term trends. EMAs are used in a number of technical analysis tools, with the MACD being the most popular. Technical analysis programs calculate EMA automatically based on values input by the user.