📖Market Analysis Knowledge——EMA

1、EMA: Exponential Moving Average (EMA)

It is a curve calculated based on stock price data, used to analyze the trend of stock prices. When calculating EMA, more weight is given to recent stock price data, which allows it to reflect the latest changes in stock prices more promptly than simple moving averages. For example, when stock prices rise or fall rapidly, the EMA will quickly reflect this change in trend.

Investors can judge whether the stock price is in an upward trend (EMA is inclined upwards) or a downward trend (EMA is inclined downwards) by observing the direction of the EMA, and can also use the crossover between EMAs of different periods (e.g., when a short-term EMA crosses above a long-term EMA forming a 'golden cross' as a buy signal; when a short-term EMA crosses below a long-term EMA forming a 'death cross' as a sell signal) to assist in making buy and sell decisions.

2、EMA Market Analysis:

① Observe the trend of the line

When the EMA line is inclined upwards, it indicates that the market is in an upward trend, and prices are continuously rising; conversely, if the EMA line is inclined downwards, it means the market is in a downward trend, and prices are falling.

② Pay attention to the position of the line

If the price is above the EMA line, it indicates that the current market is relatively strong, with bulls in control; while if the price is below the EMA line, it indicates a relatively weak market, with bears having the upper hand.

③ Be alert to crossover signals

When the short-term EMA crosses above the long-term EMA, forming a 'golden cross', it is often seen as a buy signal, suggesting that prices may rise; when the short-term EMA crosses below the long-term EMA, forming a 'death cross', it is generally a sell signal, implying that prices may fall.

④ Determine support and resistance

When stock prices pull back to near the EMA, the rising EMA line often acts as support, preventing prices from falling further; conversely, when prices rise to near the EMA, the declining EMA line may become resistance, limiting further price increases.

⑤ Analyze divergence phenomena

If prices reach new highs but the EMA line fails to rise concurrently, or if prices reach new lows but the EMA line fails to fall concurrently, such divergence may indicate that the trend is about to reverse.

⑥ Choose the appropriate period

Short-term EMAs, such as the 10-day and 20-day, can reflect recent price changes and are sensitive to short-term fluctuations, making them suitable for short-term trading; long-term EMAs, such as the 50-day and 200-day, are smoother and can show long-term trends, making them suitable for long-term investors.