Moving Averages (MA & EMA)
Price wobbles up and down every day, and chasing every wobble makes it easy to miss the bigger flow. So the moving average takes the average of the last several candles and turns it into one smooth line. The math is simple — for a 20-bar moving average, add up the last 20 closes and divide by 20; each time a candle completes, drop the oldest value, add the newest, and recompute. Connect the dots and you have the line.
For example, even if price noisily bounces between 99 million and 101 million won day to day, a steadily rising 20-day average tells you 'choppy waves, but the tide is coming in.' Conversely, a falling average is a reference line that keeps you from being fooled by a brief bounce.
The difference between MA and EMA is how the averaging is done. The simple moving average (MA/SMA) weights every candle in the window equally; the exponential moving average (EMA) gives more weight to recent candles. So the EMA reacts faster to fresh price changes — and, being faster, gets shaken by small waves more often too. Neither is superior; they're tools with different sensitivities.
Period settings like 20, 50, and 200 are used by convention. Short periods (20) are said to show the recent mood, long ones (200) the big flow. There's no magical basis behind these numbers — they're famous mostly because so many people watch the same ones.
The moving average's built-in limitation is that it lags. It's an average of past prices, so price moves first and the line follows. By the time the average turns, price has often already traveled a long way. It's a summary tool that tidies up the flow — not an oracle that tells the future.
What the data actually shows
Barobara's moving-average-based signals track the moments EMA20 and EMA50 swap places (the golden cross and death cross). What price actually did after each past occurrence is published as measured at EMA golden cross (1h) and EMA death cross (1h). Famous signal, but the outcome distribution doesn't stray far from a coin flip — it's a past record, not a prediction, and when it's fifty-fifty we publish fifty-fifty. To compare against other signals, see the setup catalog.
Common misconceptions
'Moving averages support price or hold it down?' The line itself has no power. Because many people watch the same line and place orders around similar spots, price sometimes appears to react — and even that doesn't happen every time.
'Price above the 200-day line means confirmed bull market?' Being above the 200-day line is the factual statement 'price is currently above its 200-day average' — not a promise of more upside. Plenty of crashes have started from above the 200-day line.
FAQ
Q. Should I watch the MA or the EMA?
Neither is better. The EMA is sensitive to recent prices and reacts quickly; the simple MA is slower but less rattled by small waves. Overlay both on the same chart and the difference in personality is obvious at a glance.
Q. Should I sell when price falls below a moving average?
That alone isn't grounds to sell. 'Price crossed below its average' is a past fact — the honest approach is to look up that signal's actual historical distribution and see what happened next.