The Exponential Moving Average (EMA) is a further categorization of the moving average (MA) that is solely based on the recent price data. EMAs are predominantly used by traders who are looking out for price changes.
As compared to a simple moving average, EMAs can react quickly when there is a price action for a given asset. When candles show up above the EMA, it represents a bullish market or an uptrend.
Similarly, when the candle starts to appear below the EMA line, it is a clear indication of market reversal. The asset means bearish until it completely crosses the EMA line. 8 and 20-day EMAs are more commonly used among day traders, while a 50-day or 200-day EMA is preferred for long-term holdings.