what does the double exponential moving average tell you 
although the indicator is called a double exponential moving average the equation does not rely on using a double exponential smoothing factor instead the equation doubles the ema but then cancels out the lag by subtracting a smoothed ema because of the complication of the equation dema calculations require more data than straight exponential moving average ema calculations however spreadsheets and technical charting software can easily calculate demas the dema is used most often by day traders and swing traders however long term investors may be better off using a standard moving average demas react quicker than traditional moving averages so their users are more likely to be day traders or swing traders long term investors who trade less frequently may find that a traditional moving average works better for them demas are used primarily to spot an upward or downward trend in price and analyze its strength traders watch for a price to move above or below the dema some use multiple demas with different lookback periods watching for the demas to cross each other like any moving average a dema also can be used to indicate price support or resistance that is it can help identify the price point at which a trend will pause or even reverse reading the dema is straightforward when the price of an asset is above the dema and the dema is rising it helps confirm an uptrend in price when the price is below the dema and the dema is falling that helps confirm a downtrend as noted above some traders display two or more demas with different look back periods on a single chart trade signals could be generated when these lines cross for example a trader may buy if a 20 period dema crosses above a 50 period dema or sell when the 20 period crosses back below the 50 period the dema may be less reliable when used to indicate potential support and resistance price points a trader viewing a dema or any moving average to pinpoint potential support or resistance points should make sure that it has served this function in the past if not it likely won t in the future double exponential moving average dema and the triple exponential moving average tema as the names imply the double ema includes the ema of an ema the triple ema tema has an even more complex calculation involving an ema of an ema of an ema the goal is still to reduce lag and the triple ema has even less lag than the double ema a dema or any moving average will likely be more reliable if a longer period of time is selected for tracking this is because time diminishes the effects of noise in the markets limitations of the double exponential moving averagemoving averages can provide little or no insight during times when the price of an asset is choppy or range bound no reliable trend can be identified at such times the price will frequently cross back and forth across the dema in addition the strength of the dema is its ability to reduce lag but that can be its weakness in some circumstances the reduced lag gets the trader out quicker reducing losses yet reduced lag can also encourage overtrading by providing too many signals the indicator may tell a trader to sell when the price makes a minor move thus missing out on a greater opportunity if the trend continues the dema is best used in conjunction with other forms of analysis such as price action analysis and fundamental analysis 