An exponential moving average, also known as EMA, is a momentum indicator. It differs from a simple moving average in that weight is given to the latest received data.
EMA is also known as the "exponentially weighted moving average".
This reacts to recent changes faster than the simple moving average. 12- and 26-day EMA's are the most widely used short-term averages in stock trading, and are often used to indicate the moving average convergence divergence (MACD) and percentage price oscillator (PPO). 50- and 200-day EMA's can be indicators of long-term trends utilized by Traders in options trading and futures trading.
Related terms: Island Reversal, Importance of Volume, Fibonacci Retracement, RSI, Geometric vs. Functional