Calculation and mechanics
The EMA is calculated continuously: EMA today = close today x k + EMA yesterday x (1 - k), with k = 2 / (21 + 1) ~ 0.0909. For the EMA21, around 9.1% of the current close thus flows directly into the new value. The remaining roughly 90.9% comes from the previous EMA, in which older prices are contained with ever smaller weight.
Further metrics can be derived from the position of the price relative to the EMA. The streak counts for how many consecutive periods the close has been above or below the EMA21. The distance shows the percentage gap between the current close and the line: (close / EMA21 - 1) x 100.
EMA today = close today x k + EMA yesterday x (1 - k), with k = 2 / (21 + 1) ~ 0.0909
Distinction
A simple moving average (SMA) weights all prices in its window equally. The EMA weights newer data more heavily and reacts faster to price changes at the same period length.
SMA50 and SMA200 are often used to look at longer trends, while shorter EMAs react more strongly to current moves. The EMA21 streak describes how long the price has stayed on the same side of its average.
The distance to the 52-week high, by contrast, measures the gap to a longer-term price extreme. An ETF can therefore sit above its EMA21 for many days and still trade well below its 52-week high. Both metrics describe one ETF on its own, the comparison with another market comes from the return relative to a benchmark.
Related terms
- Distance to the 52-Week High (52WH %, distance to the yearly high)
- Treemap (Tiles View) (Heatmap tiles, area chart)
- Return Relative to a Benchmark (Relative performance, vs SPY, vs ACWI)
- Historical Volatility (Realised Volatility, HV)
All market and analytical information is provided for educational and analytical purposes only and does not constitute investment advice or a trading recommendation.