(Case Study on Ping Identity Stock price)
Exponential Moving Average (EMA) measures the trend direction over a period of time. Different from SMA, EMA applies more weight to data that is more current. Because of its unique calculation, EMA will follow prices more closely than a corresponding SMA.
Althougth Moving averages may help you trade in the general direction of a trend, but with a delay at the entry and exit points.
EMA = (K x (C - P)) + P
Where:
C = Current Price
P = Previous periods EMA
K = Exponential smoothing constant
The smoothing constant K, applies appropriate weight to the most recent price. It uses the number of periods specified in the moving average
P1, P2, P3 are generally taken on the 5th, 10th, 20th days.
P1 day, P2 day, P3 day smooth moving average of the closing price.
Recently, Goldman Sachs Adjusts Ping Identity's Price from $28 to $31, you may ask yourself a question, should I follow?
Below is PING Identity stock chart and EMA extracted from moomoo app
From the above chart, we can find out that EMA 5 (days), EMA 10 (days), EMA 20 (days) all move up, this is a strong indicator that PING stock price will goes up, however, identifing trend only tells us that stock price will move up or down, it will not tell us when is the best time to buy or sell, in order to find the best time to buy or sell we need to do more research from other indicators including Volatility, Oscillator, Momentum