EMA (Exponential Moving Average)
The EMA is a moving average that gives more weight to recent prices, so it reacts faster than a simple average.
Also known as: exponential moving average, EMA
Each day's EMA is the new close times a smoothing factor plus the previous EMA times the remainder, so the most recent prices count most and old ones fade rather than drop out. A 12-day EMA hugs the price more closely than a 12-day SMA.
EMAs are the building block of MACD, which subtracts a 26-day EMA from a 12-day EMA. Faster response means earlier signals and more false ones.