--- title: "What Is a Moving Average? SMA vs EMA Explained" term: "Moving average (SMA and EMA)" type: glossary_term canonical: https://www.moonwire.org/insights/glossary/moving-average.html --- # What Is a Moving Average? SMA vs EMA Explained > The average closing price over a rolling window of bars. A simple moving average weights every bar equally; an exponential one weights recent bars more, so it reacts faster. A **moving average** smooths a price series by averaging the last *n* closes and recalculating as each new bar prints. It is the most widely used trend reference in technical analysis, mainly because it is simple and everyone can compute the same number. ## Simple vs exponential - **Simple moving average (SMA)**: the plain arithmetic mean of the last *n* closes. A 20-period SMA gives each of the last 20 bars exactly one-twentieth of the weight, and a bar's influence vanishes the moment it leaves the window. - **Exponential moving average (EMA)**: a weighted average that gives more influence to recent closes. Each new value is the previous EMA plus a fraction (2 ÷ (*n* + 1)) of the gap between the latest close and that previous EMA. It responds to new moves sooner and never fully forgets older bars. Because of that weighting, when price turns the EMA usually bends first and the SMA follows. ## How to read price against an average - Price above a rising average describes an uptrend on that timeframe; below a falling average, a downtrend. - The **distance** from price to the average, as a percentage, describes how stretched the move is. "The 20-EMA sits 11% below price" means price has run well ahead of its recent average. - Averages lag by construction. They confirm what has happened; they do not anticipate turns. ## In MoonWire analysis Our [multi-timeframe reads](https://www.moonwire.org/insights/glossary/multi-timeframe-analysis.md) use the **20-period EMA** to set trend direction on each timeframe: a close more than 0.3% above it is "up", more than 0.3% below is "down", and anything inside that band is "sideways". The reads also quote the 20-period SMA and EMA side by side with their distance from price — for example, Ethereum's [3 September 2026 read](/insights/eth-technical-read-2026-09-03.html) put the 3-day SMA20 14.24% and EMA20 11.38% below price. The [market regime](https://www.moonwire.org/insights/glossary/market-regime.md) scoring uses a moving average too: Bitcoin's close relative to its 20-day SMA is part of how a risk-on or risk-off call is graded. ## Further reading - [Wikipedia: Moving average](https://en.wikipedia.org/wiki/Moving_average) - [Investopedia: Exponential Moving Average (EMA)](https://www.investopedia.com/terms/e/ema.asp) ## Where this appears in MoonWire analysis - [What Is the Efficiency Ratio in Trading? Kaufman's Measure, With Real Readings](https://www.moonwire.org/insights/what-is-the-efficiency-ratio-in-trading.md) — Sep 12, 2026 - [Solana: the 3D floor retreated to a nine-touch level 27% below price as the weekly ceiling closed to 9.44%](https://www.moonwire.org/insights/sol-technical-read-2026-09-10.md) — Sep 11, 2026 - [Ethereum: the monthly trend has turned up for the first time in this stream's record, taking alignment to aligned_up](https://www.moonwire.org/insights/eth-technical-read-2026-09-10.md) — Sep 11, 2026 - [Bitcoin: all three timeframe scans now name the same resistance shelf, 82,575 to 82,850](https://www.moonwire.org/insights/btc-technical-read-2026-09-10.md) — Sep 11, 2026 - [Solana: a new 3D pivot at 110.60 has filled part of the 45% stretch that was empty a week ago](https://www.moonwire.org/insights/sol-technical-read-2026-09-03.md) — Sep 11, 2026 - [Ethereum: the weekly scan has compressed to a 2.85% band - 0.30 of one ATR, the tightest cell on the board](https://www.moonwire.org/insights/eth-technical-read-2026-09-03.md) — Sep 11, 2026 - [Bitcoin: the converged 80,600 floor has left both the 3D and weekly ledgers as price gives back 4.54%](https://www.moonwire.org/insights/btc-technical-read-2026-09-03.md) — Sep 11, 2026 - [Three Bitcoin Reads Waited on a Level. The Conviction Was in Fee Revenue.](https://www.moonwire.org/insights/market-pulse-2026-08-25.md) — Aug 29, 2026 - [Solana: four resistances left the 3D ledger at once - nothing is listed now until 147.825](https://www.moonwire.org/insights/sol-technical-read-2026-08-25.md) — Aug 29, 2026 - [Ethereum: RSI 74.27 on the 3D is the highest reading in this week's nine-cell board](https://www.moonwire.org/insights/eth-technical-read-2026-08-25.md) — Aug 29, 2026 - [Bitcoin: the 3D and weekly scans have resolved to the same 2.79%-wide band, with price 0.20% off its floor](https://www.moonwire.org/insights/btc-technical-read-2026-08-25.md) — Aug 29, 2026 - [Bitcoin: the 3D average that climbed through price last week has fallen back below it](https://www.moonwire.org/insights/btc-technical-read-2026-08-18.md) — Aug 29, 2026 --- *MoonWire surfaces and summarizes public crypto news.* **General information only — not financial advice.** MoonWire Ltd. is not licensed by ASIC and holds no AFSL. This content does not consider your objectives, financial situation, or needs, and is not a recommendation to buy, sell, or hold any asset. *This analysis is generated by artificial intelligence and may be inaccurate, incomplete, or fabricated. Independently verify before acting.* © 2026 MoonWire Ltd. · [Terms](https://www.moonwire.org/legal/TOS) · [Risk Disclosure](https://www.moonwire.org/legal/RISK_DISCLOSURE) · [Privacy Policy](https://www.moonwire.org/legal/PRIVACY_POLICY)