Signals

EMA — Exponential Moving Average

Weight recent prices more heavily for faster trend response.

What it is

The Exponential Moving Average is a rolling average that weights recent prices more heavily than older prices, so it reacts faster than an SMA.

When to use it

Following shorter-term trend changes that an SMA may miss.
Creating momentum-aware crossover systems such as EMA_12 versus EMA_26.
As a building block for composite indicators like MACD.

The maths

EMA[t] = close[t] × k + EMA[t-1] × (1 - k) where k = 2 / (N + 1) The first EMA value is seeded with the SMA.

What it tells you

Reacts faster than SMA to recent price changes. Used in MACD and many crossover systems. A steeply rising EMA is a sign of strong momentum.

REST example

python

import os
import requests

response = requests.get(
  'https://api.financedata.com/v1/signals/EMA/AAPL',
  params={'start_date': '2025-01-01', 'end_date': '2025-04-30', 'period': 20},
  headers={'X-API-Key': os.environ['FDA_KEY']},
  timeout=30,
)
response.raise_for_status()
print(response.json())

MCP example

Tool call body

{
"name": "get_ema",
"arguments": {
  "symbol": "AAPL",
  "start_date": "2025-01-01",
  "end_date": "2025-04-30",
  "period": 20
}
}

Agent prompt that triggers it

Fetch the 20-day exponential moving average for AAPL and tell me whether it is rising into the latest reading.