Exponential Moving Average (EMA)

EMA (Exponential Moving Average) is a further development in the previous variants of Moving Averages (SMA and WMA). This indicator has been involved throughout the history of stock price movements and the increasingly heavy weighting calculations for the final day, so that later EMA line will look smoother (see picture). 

Functions and how to read EMA is the same line of precision with SMA previously:

• Identify trends that will occur
• Determine support and resistance
• Signal indicating bullish and bearish signal
• If the stock price above the EMA = bullish
• If the share price below the EMA = bearish
• As a filter (to smooth fluctuations) on the price movement of other indicators

Read also : Double Crossover Moving Averages