# Exponential Moving Average (EMA)

Before reading this documentation please check the Simple Moving Average (SMA) documentation, this will make a lot more sense afterward.

The Exponential Moving Average is a type of moving average indicator that takes into account the average among previous candle price data. The average among the prices is used to plot a line that goes over the price action.

When the price action is above the EMA the market is deemed to be "bullish", while the price action is below the EMA the market is deemed to be "bearish".

The differentiating factor between Simple Moving Average and Weighted Moving Average is that the EMA adds more weight to the more recent candles at a **exponential interval.** So the more recent candles have more significance when used to calculate the average.

### EMA Formula

Images source: Investopedia

For more information (also the source) visit: Investopedia

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