A simple moving average (SMA) is a moving average calculated by adding recent closing prices and then dividing that by the number of time periods in the calculation average. Short-term averages respond quickly to changes in the price, while long-term averages are slower to react.

The exponential moving average (EMA) is a type of moving average that places a greater weight and significance on the most recent price data point. Exponentially moving averages react more sensitively to recent price changes than a simple moving average, which applies an equal weight to all data points in the period.

One way to determine trend strength is to use two moving averages; one faster and one slower, and measure where price is relative to each moving average (MA). In a bullish trend, price should be above BOTH the slower AND faster moving average. If the distance between price and each MA continues higher, it means the bullish trend is getting stronger. If the distance between price and the moving averages shrinks, the bullish trend is getting weaker. In a bearish trend, price should be below BOTH the faster AND slower moving average.