The ExponentialAverage function in ProBuilder language is used to calculate the exponential moving average (EMA) of a given data series over a specified number of periods. This technical indicator is particularly useful in financial analysis to smooth out price data and help identify trends by reducing the lag effect associated with simple moving averages.

Syntax:

ExponentialAverage[N](price)

Where N represents the number of periods over which the average is calculated, and price indicates the data series (such as closing prices or another indicator) to which the EMA is applied.

Example:

i1 = RSI[14]
i2 = ExponentialAverage[10](i1)
RETURN i1 as "RSI", i2 coloured(147,112,216) as "smoothed RSI"

In this example, the Relative Strength Index (RSI) is first calculated over 14 periods and stored in the variable i1. Then, an exponential moving average of i1 is computed over 10 periods and stored in i2. The result is two series: the original RSI and a smoothed version of the RSI, with the latter displayed in a specific color.

• The RSI (Relative Strength Index) is a momentum oscillator that measures the speed and change of price movements. It oscillates between zero and 100. Traditionally, RSI values over 70 suggest an overbought condition, and values under 30 indicate an oversold condition.
• The ExponentialAverage function helps in reducing fluctuations and providing a smoother graphical representation, making it easier to identify trends in the data.

This function is essential for traders and analysts who rely on technical indicators to make informed decisions in the financial markets, as it enhances the interpretability of fast-moving and volatile data series.