Similarly a falling Simple Moving Average can be used as an indicator of a downward moving market. A Simple Moving Average crossing below a Simple Moving Average of longer length may be used to indicate a markets direction is turning down. Conversely A Simple Moving Average crossing above a Simple Moving Average of longer length may be used to indicate a markets direction is turning up. This displays the Exponential Average of the close for 4 different time periods. With the Exponential Average, all previous bars have an effect of the Exponential Average of a particular bar.
Nearer bars have more of an effect than bars further away.
A rising Exponential Moving Average can be used as an indicator of an upwardly moving market. Similarly a falling Exponential Moving Average can be used as an indicator of a downward moving market. A Exponential Moving Average crossing below a Exponential Moving Average of longer length may be used to indicate a markets direction is turning down. Conversely A Exponential Moving Average crossing above a Exponential Moving Average of longer length may be used to indicate a markets direction is turning up. The Exponential Moving Average is calculated as follows.