Moving averages
TEMA Indicator on a Live Gold Chart
The triple EMA stacks three exponential averages, each one taken of the one before, and mixes them so most of the lag cancels out. It follows price tightly while staying smoother than the raw close; on the hourly gold chart below it often sits within a candle’s body of price.
What it shows
The TEMA sits very close to price and turns sooner than a DEMA or EMA of the same length.
How Pravex works it out
- Work out an EMA of the source price over N candles, the close by default. Call it E1.
- Take an EMA of E1 over the same length and call it E2, then an EMA of E2 and call it E3.
- TEMA = 3 × (E1 − E2) + E3. The first part adds back the lag that E1 has behind price, and E3 keeps the shape from running off.
- The line starts roughly three times the length into the data, since E3 needs E2, which needs E1.
Settings
| Setting | Default | What changing it does |
|---|---|---|
| Length | 9 | Shared by all three EMAs. Raising it is the main way to calm the TEMA down: even at 30 it reacts quicker than a plain 30 EMA, but it stops chasing every hourly wiggle. |
| Source | close | The price at the bottom of the three-EMA stack. Any spike in it is magnified by the 3 × step, so hlc3 or ohlc4 give a slightly steadier TEMA than the close. |
How traders read it
The TEMA suits traders who want the line to stay with price. A flip in its slope comes early, so it is used to spot a change in short-term direction.
Price above a rising TEMA leans up and price below a falling one leans down. Because the line hugs the candles, the gap between price and TEMA is small, and a wider gap marks an unusually stretched move.
When it misleads
It is quick, and that has costs. With three stacked averages the line overshoots sharp turns by more than a DEMA does, and it reacts to every wiggle in a sideways range. The first point only appears after about three times the length in candles, so a short loaded history leaves the left side of the chart empty.
Questions and answers
What is the TEMA formula?
Take an EMA of the price, an EMA of that, and an EMA of that again. Then TEMA = 3 × (first − second) + third.
Is the TEMA the same as TRIX?
No. Both stack three EMAs, but TRIX takes the percent change of the third one and plots it in its own pane. The TEMA combines the three into a price line on the chart.
Why is the left side of the TEMA empty?
The third EMA can only start once the second has values, and the second waits for the first. At length 9 that is roughly 25 candles before the line appears.
When does the TEMA overshoot?
At sharp reversals. The 3 × (E1 − E2) part projects the recent move forward, so after a quick spike and drop the line can run past price for a candle or two before it bends back.
Related: Double EMA, Moving Average Exponential, Hull Moving Average, Simple Moving Average, every indicator.
Not financial advice. Read our disclaimer.
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