Wilder Moving Average

The Wilder Moving Average (WMA) is a technical analysis tool developed by J. Welles Wilder Jr. It is designed to identify trends and potential entry and exit points in the financial markets2. Unlike the simple moving average (SMA) or the exponential moving average (EMA), the Wilder Moving Average places more emphasis on recent price movements, making it more responsive to short-term changes in the market.

Key Features:
Smoothing Technique: Wilder's Moving Average uses a smoothing technique that gives greater weight to more recent data points. This results in a faster and more responsive moving average2.

Calculation: The calculation involves subtracting the previous average from the current price and adding the resulting difference to the previous average.

Usage: Traders use the Wilder Moving Average to identify trends, support and resistance levels, and potential crossovers, where the price crosses above or below the moving average, indicating a potential trend reversal.