EMA Crossover to find Buying and selling opportunites

EMA stands for Exponential Moving Average. EMA is similar to SMA (simple Moving Average). EMA is a technical analysis indicator. Technical analyst or trader use EMA for analysis of scrip. Generally technical analyst of stock market use EMA 10 or EMA 26 to find buying and selling opportunities. EMA is quite simple compared to other indicators. 

EMA can be calculated using following formula.

EMA = {Close – EMA (previous day)} * multiplier + EMA (previous day)
Multiplier = (2 / (Time periods + 1))

We can use EMA indicator to find buying and selling opportunities in stock market. According to stock market strategy, if the value of EMA goes higher after EMA crossover then it is buying opportunity. If the value of EMA goes down after the EMA crossover then it is selling opportunity. 

 

Here from image, we can see after EMA crossover, EMA is going down so, it will create selling opportunity. We can see sell call from image. And when EMA goes higher after EMA crossover it creates buying opportunity. We can see buy call from image.