The Double Exponential Moving Average (DEMA) is a technical indicator that combines a single exponential moving average (EMA) with a double EMA to reduce lag in trend identification. Developed by Patrick Mulloy, it responds more quickly to price changes than a standard EMA, making it useful for identifying trends and generating buy or sell signals earlier. DEMA is commonly used in conjunction with other indicators to confirm trend direction and momentum.
Example
“The trader used a 21-period DEMA on the 4-hour chart to identify trend direction, entering long when price crossed above the DEMA line.”