The 50-Day EMA and 100-Day EMA are two exponential moving average trend indicators that our team uses to help determine a stock’s current trend. The 50-Day EMA is created by taking every closing price for a stock over the past 50 days of trading and forming an exponential moving average. Similarly, the 100-Day EMA is created by taking every closing price for a stock over the past 100-Days of trading and forming an exponential moving average. Exponential moving averages differ from simple moving averages in that each day in the period of the exponential moving average has a different weighting in the average. Whereas with simple moving averages, each day in the period has an equal weighting in the average.
Our team uses the 50-Day EMA and 100-Day EMAs in tandem to serve as a medium-term Buy/Sell trend indicator for stocks. The 50-Day EMA serves as the ‘Buy’ or ‘Sell’ signal indicator and the 100-Day EMA serves as the ‘trigger’ line. When a stock’s 50-Day EMA crosses above the 100-Day EMA, this is a bullish sign and signals a ‘Buy’. When a stock’s 50-Day EMA crosses below the 100-Day EMA, this is a bearish sign and signals a ‘Sell’.
Once this indicator generates either a ‘Buy’ or ‘Sell’ signal, as long as the 50-Day EMA remains on that side of the 100-Day EMA, the trend signal is still intact.