A variation on traditional moving averages in an attempt lessen the lag of the regular exponential moving average.
Overview
Developed by Patrick Mulloy and introduced in the January 1994 issue of Technical Analysis of Stocks & Commodities magazine, this technical indicator is an acronym standing for “Triple Exponential Moving Average”. TEMA was designed to lessen the lag of a regular exponential moving average. It combines the single exponential MA, a double exponential MA, and a triple exponential MA that produces less lag than any of its three components individually; it is NOT a moving average of a moving average of a moving average as the name “triple” might suggest.
200-period TEMA on the EUR/USD 4H Chart 3/21/2011
Source: VT Trader
Interpretation
The TEMA has same interpretations and thus can be used to replace traditional moving averages.
Implementation
The MA Price (ie. close prices), MA Periods (ie. 200 period), and MA Type (ie. exponential) are typically the input parameters of the TEMA indicator.
