Exponential Moving Average (EMA)
A moving average that weights recent prices more heavily — faster than the SMA.
Definition
EMA applies an exponentially decaying weight to past prices, so the most recent observation matters most. It reacts faster than the simple moving average (SMA), making it more useful for short- to medium-term timing. Popular EMAs include the 20 and 50 for short-term trends, and the 200 EMA as a long-term regime filter — price above 200 EMA is widely interpreted as 'bull market'. The Golden Cross (50 EMA crossing above 200 EMA) and Death Cross are headline-grabbing classic signals.
Formula
EMA_t = alpha * Price_t + (1 - alpha) * EMA_{t-1}
alpha = 2 / (N + 1)
For a 20-period EMA, alpha = 2/21 ≈ 0.095Worked example
SPY closes at $510, prior 20-EMA was $500. alpha = 2/21 ≈ 0.095. New 20-EMA = 0.095 * 510 + 0.905 * 500 = $500.95. After a strong move up the EMA pulls up faster than a 20-SMA would.
How ARIA Analyst uses it
ARIA uses 20/50/200 EMAs across all charts and treats the 200 EMA crossover as a regime flag in the regime-conditioned ML ensemble.
Related terms
MACD
Moving Average Convergence Divergence — a trend-following momentum indicator built on two EMAs.
Bollinger Bands
A volatility envelope: 20-period moving average plus and minus two standard deviations.
ADX
Average Directional Index — measures trend strength from 0 to 100 without indicating direction.
Fibonacci Retracement
Horizontal lines at 23.6%, 38.2%, 50%, 61.8% of a price swing — common support/resistance targets.
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