Weighted Moving Average (WMA)

The WMA is a trend indicator. This moving average is considered as one of the fastest amongst them. Its quick reaction to price movements is produced by assigning greater weight to the most recent periods and prices. To illustrate it, it reacts faster to price changes than the SMA and EMA. However, it is somewhat slower than the Double EMA or DEMA. Like most of the moving averages, traders use this indicator to spot trends and trend reversals. This is done mainly by crossovers between a fast and slow moving average. If the fast moving average crosses the slow one upwards, the price is rather bullish and buy signal will be generated. However, when the fast moving average crosses the slow one downwards, the bears are taking over and a sell signal is open.



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