The DEMA uses two exponential moving averages (EMAs) to eliminate lag, as some traders view lag as a problem. The DEMA is used in a similar way to traditional moving averages (MA).The most commonly-used signal is the DEMA crossover. Watch for the DEMA line to cross the price bars, or for a shorter-term DEMA to cross a longer-term DEMA, to indicate a change in trend. For example, the 21-day DEMA crossing above the 55-day DEMA would be a bullish signal. These DEMA crossovers (whether of price or another DEMA) typically happen much earlier than the corresponding traditional EMA crossover. In the example below, the green arrows mark DEMA crossovers and the blue arrows mark the corresponding EMA crossovers. In both cases, the DEMA crossover happens before the EMA crossover. The average helps confirm uptrends when the price is above the average, and helps confirm downtrends when the price is below the average. When the price crosses the average that may signal a trend change. Moving averages are also used to indicate areas of support or resistance.
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The DEMA uses two exponential moving averages (EMAs) to eliminate lag, as some traders view lag as a problem. The DEMA is used in a similar way to traditional moving averages (MA). The average helps confirm uptrends when the price is above the average, and helps confirm downtrends when the price is below the average. When the price crosses the a…
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The DEMA uses two exponential moving averages (EMAs) to eliminate lag, as some traders view lag as a problem. The DEMA is used in a similar way to traditional moving averages (MA). The average helps confirm uptrends when the price is above the average, and helps confirm downtrends when the price is below the average. When the price crosses the a…
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