Double Exponential Moving Average (DEMA)
Description
DEMA, Double Exponential Moving Average is used to smooth out price data and reduce the lag that is inherent in other moving averages, such as the SMA or EMA. It's similar to EMA in that it gives more weight to recent price data, but it uses a more complex formula.
Calculate DEMA, first calculate EMA of the price data. DEMA is then calculated by taking the EMA and applying the EMA formula again to the result, creating a "double smoothed" average.
The formula:
DEMA = 2*EMA - EMA(EMA)
DEMA is used to identify trends and make trading decisions. If the price is above the DEMA, it may indicate an uptrend, while if the price is below the DEMA, it may indicate a downtrend. Use the DEMA in combination with our other tools to make informed decisions.
End Point
Example
Use Cases:
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