It only estimates the continuation or reversal of the price trend based on the recent data points captured.ĮMA can be of varied types depending upon the number of price points taken into consideration. The difference between DEMA and TEMA is that TEMA’s formula uses a triple-smoothed EMA in addition to the single and double-smoothed EMAs employed in the formula for DEMA.Note that the exponential moving average is nonetheless a lag indicator, i.e, it doesn’t predict future price trends. Just like DEMA, the TEMA reduces the lag difference between different EMA. TEMA reduces the lag of EMAs and makes them more responsive to the prices.Īfter the Double Exponential Moving Average (DEMA) was developed in 1994, Patrick Mulloy created the Triple Exponential Moving Average (TEMA). The Triple Exponential Moving Average Indicator (TEMA)– Watch our Webinar on the Magic of Moving Averages 5. Changes in volatility are good indicators for a trend reversal, and hence, stock trades. Since the DEMA line mimics the stock prices most closely, it is, therefore, most sensitive to the stock volatility. The blue line indicates a simple moving average line, the purple line indicates exponential moving average (EMA), and the yellow line is the DEMA line.įrom the above chart, we can say that the DEMA is closest to the price points and with the least deviations. The Exponential Moving Average indicator of the last 9 periods of Nifty 50 is plotted as a line on the price charts as shown below: The formula is:Ĭurrent EMA = x Multiplier + EMA (Previous Time Period) The last step involves the calculation of the current EMA by taking the period from the initial EMA until the most recent time period, using the price, multiplier, and the previous period’s EMA value.Then we need to calculate the multiplier for weighing the exponential moving average.
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