Trend indicators
TEMA: Triple Exponential Moving Average
An even faster moving average than DEMA: three EMAs combined to remove most of the delay.
The idea in plain words
Like DEMA, it estimates how much a moving average trails the price and corrects for it, using a third level of smoothing to keep the line smooth while staying close to the price.
How it is calculated
EMA of the price, EMA of that, and EMA of that again, combined as three times the first minus three times the second plus the third.
E1 = EMA(close, N), E2 = EMA(E1, N), E3 = EMA(E2, N)
TEMA = 3 × E1 − 3 × E2 + E3 (default N = 14)How to use it
- Short-term trend following, for example price crossing TEMA, or a fast TEMA crossing a slow one.
Drawing conclusions
- TEMA hugs the price closely; turns appear quickly but some will be false.
Example
On a 15-minute chart, TEMA(14) turns up one candle after a low, while the 14-period SMA takes about six.
Prices in examples are illustrative.
Watch out for
- Very responsive, so expect more whipsaws in choppy markets.
A little history
Patrick Mulloy, Technical Analysis of Stocks & Commodities, 1994 (together with DEMA).
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.