Indicators
Moving average (EMA)
The exponential moving average smooths price over a number of candles (here 20), giving more weight to recent ones.
Why it works
In a trend, price tends to respect the EMA as dynamic support or resistance. Its slope also tells you the direction at a glance.
How to use it
In an uptrend (price above a rising EMA), look for buys when price pulls back to the EMA and closes back up.
The typical mistake
Using the EMA as a buy signal in a flat, sideways market where price crosses it every few candles.
FAQ
What is EMA in trading?
The exponential moving average smooths price over a number of candles (here 20), giving more weight to recent ones.
How do you trade EMA?
In an uptrend (price above a rising EMA), look for buys when price pulls back to the EMA and closes back up.