NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
A 10-day exponential moving average uses a smoothing multiplier of 2/(N+1). If the previous EMA is Rs 100 and today's close is Rs 122, what is today's EMA?
Today's EMA is Rs 104. The multiplier for a 10-period EMA is 2/11, so the EMA moves 2/11 of the gap between today's close of 122 and the previous EMA of 100. That is 22 x 2/11 = 4, added to 100.
- ARs 104Correct
- BRs 111
- CRs 102
- DRs 122
Explanation
Multiplier = 2/(10+1) = 2/11. EMA = 100 + (2/11) x (122 - 100) = 100 + (2/11) x 22 = 100 + 4 = 104. Rs 111 wrongly uses a 50% weight, which is the midpoint of the two values. Rs 122 would ignore history entirely.
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