An Exponential Moving Average (EMA) applies a multiplier — derived from the chosen period — that gives exponentially more influence to the most recent prices. Yesterday's close matters more than the day before, which matters more than the one before that, and so on. The result is a smoother line that is quicker to turn when price direction changes.
EMAs are widely used in faster-paced timing signals, including the MACD (which is built from the difference between a 12-period and 26-period EMA). Because the EMA responds sooner to price changes, it tends to produce earlier crossover signals than the SMA — which can be an advantage if the signal is real, or a disadvantage if it generates more whipsaws.
No moving average type is universally superior. The EMA's responsiveness makes it better for catching turns; the SMA's stability makes it better for identifying established trends. Many practitioners use both: the EMA for entry signals and the SMA for the big-picture trend filter.