Module 3 — Price behaviour
EMA 8 and SMA 200
5 minute read
In plain English
A moving average is the average price over a number of periods. The EMA 8 reacts quickly to recent prices; the SMA 200 is slow and describes the longer-term picture.
Why it matters
They turn a noisy price path into something you can describe in a sentence, and many participants watch the same lines.
Example
Price above a rising EMA 8 describes short-term strength. Price far below the SMA 200 describes a long-term downtrend.
Try this
Add both to one chart and note how differently they respond to the same move.
Common mistake
Treating a moving-average crossover as an instruction. Crossovers are lagging descriptions of what already happened.
What this does not mean
A moving average does not support price and does not predict a bounce.
Educational content only. Not financial advice.