Reading momentum with the 8/21 EMA, why the 200 EMA matters, and when price is stretched.
What's the difference between an MA and an EMA? A moving average weights every price equally. An exponential moving average gives recent prices more weight, so it reacts faster. Read the guide
What does the 8 EMA vs 21 EMA tell you? Who's in control. 8 above 21: momentum is strong. 8 below 21: momentum is weak, so avoid going long. Read the guide
Is the 8/21 EMA a strategy? No, it's a filter. Find the setup first, then only take it if momentum supports it. Read the guide
What do weak momentum conditions look like? The 8 and 21 crossing back and forth, flattening, with no separation and choppy price. Often the best move is to do nothing. Read the guide
Why does the 200-day EMA matter? It covers roughly a year of trading, so it reflects long-term positioning and trend health. That makes it a natural decision point. Read the guide
Why is the 200-week EMA so powerful? It covers about four years of history. Price reaching it often brings a big reaction, a major bounce or a critical breakdown, but rarely nothing. Read the guide
How do you define an uptrend? Higher highs and higher lows. A downtrend is lower highs and lower lows. Read the guide
What part of a trend does a trend follower aim to catch? The middle 60 to 70% of the move, not the exact bottom or top. Read the guide
How can you tell a stock is overextended? It's stretched far above its 21 EMA compared with its own past runs. Each stock differs: one may cool off at 7 to 10% above, another only past 25%. Read the guide
What is mean reversion? Price as a rubber band: the further it stretches from its average, the stronger the snap back. Trade exhaustion, not just extension. Read the guide