#candlestick_patterns
🔥Candlestick Structures & Basics | Candlestick patterns, Trading charts, Candlesticks🔥
- Definition of ema (exponential moving average)
An exponential moving average (EMA) gives more weight to recent prices, making it more sensitive to price changes.
The EMA reacts to price changes more quickly than the SMA, which can be both an advantage and a disadvantage. While it can provide timely signals to enter or exit trades, it can also be more prone to false signals during periods of high volatility.
- Definition of sma (simple moving average)
Unlike the EMA, the simple moving average (SMA) gives equal weight to all prices in a selected period. It is often used by long-term traders to identify long-term trends and filter out short-term noise.
Many traders use the intersection of different moving averages, such as the 50-day SMA crossing above the 200-day SMA, as a signal of a potential change in trend direction. This strategy, known as a "golden cross" when the short-term average crosses the long-term average from above, or a "death cross" when the reverse occurs, is a popular technique among trend-following traders.