Weighted Moving Average (WMA) - Indicator Formula

The weighted moving average is a trend following technical indicator that lags the market because it is calculated based on past prices. The weighted moving average can help smooth out an asset's price action by filtering out random short term price fluctuations.

The weighted moving average assigns more weight to the most recent price points. This enables it to be much more sensitive to price action than just a simple moving average.

The weighted moving average can help identify trend direction, signal potential short-term trend changes or pullbacks, and provide dynamic support or resistance.

Calculation:

WMA( t ) = ( P( t ) * n ) + ( P( t - 1 ) * ( n - 1 ) ) + ... + P( t - n ) / ( n * ( n + 1 ) ) / 2

where:

P = Price

n = time period