Triple Exponential Moving Average (TEMA)

Definition

Triple Exponential Moving Average (TEMA) is a further improved moving average indicator that reduces lag time by combining three different levels of exponential moving averages (EMA). TEMA is designed to respond more quickly to price changes compared to EMA and DEMA.

Calculation

TEMA consists of a regular EMA, an EMA based on that EMA, and an EMA based on the second level EMA. The formula for calculating TEMA is as follows:

TEMA=3×EMA−3×EMA(EMA)+EMA[EMA(EMA)]

Where:

• EMA is the Exponential Moving Average of the base data.

• EMA(EMA) is the Exponential Moving Average of the EMA.

• EMA[EMA(EMA)] is the Exponential Moving Average of the second level EMA.

Through this formula, TEMA integrates multiple layers of smoothing to further reduce lag and enhance sensitivity to price changes in comparison to simpler moving average indicators.