The Double Exponential Moving Average (DEMA) was developed by Patrick Mulloy for the purpose of reducing lag and increasing responsiveness. This fast-acting moving average allows traders to spot trend reversals quickly, resulting in better entries into newly formed trends. The indicator is obviously based on the Exponential Moving Average (EMA)
but it follows the price more closely. Its calculation and usage somewhat resemble the Hull Moving Average (HMA)
. It helps traders spot the prevailing trend and is often used in combination with other signals and analysis techniques.