Indicators · Trend and moving averages
Triple exponential moving average (TEMA): fast, with a catch
How the TEMA combines three EMAs to cancel lag, what its overshoot looks like on a price jump and on Tesla’s 2026 slide, and how Finabase draws and scores it.
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The triple exponential moving average (TEMA) is the fastest member of the exponential moving-average family. Patrick Mulloy introduced it in 1994, a month after his double exponential average (DEMA). It stacks three layers of exponential smoothing and then combines them so that the lag of the first layer is almost completely cancelled. On a steadily trending chart the TEMA lies nearly on top of price.
Speed has a price, and with the TEMA it is easy to see. When price jumps or reverses, the TEMA does not just catch up, it overshoots. This guide explains the construction, shows the overshoot on a clean illustration and on Tesla's mid-2026 slide, and covers how to use the TEMA without being fooled by it. One naming note before starting: TEMA is unrelated to TRIX, the "triple-smoothed" momentum oscillator, even though both use three EMAs.
How TEMA is built
Start with an ordinary EMA of the closes (call it E1). Smooth E1 with the same EMA to get E2, then smooth E2 to get E3. Each layer trails the one before it by about the same distance in a trend. Mulloy's formula weights the three layers so that those trailing distances cancel out.
The coefficients 3, −3, 1 are not arbitrary. They come from the same algebra that gives Brown's triple exponential smoothing for forecasting a series that has a trend and a curve. In plain terms, the TEMA estimates the level, the slope and the bend of the recent price path from the three layers, and reports where that path says price is now.
A worked example: the straight line
Take price rising exactly $1 a bar and a period of 10, so α = 2 ÷ 11. Once settled, each EMA layer trails the one above it by 4.5 bars:
| Line | Value |
|---|---|
| Price | P |
| E1 | P − 4.5 |
| E2 | P − 9.0 |
| E3 | P − 13.5 |
| TEMA = 3E1 − 3E2 + E3 | 3(P − 4.5) − 3(P − 9.0) + (P − 13.5) = P |
The TEMA lands exactly on price. The DEMA does too in this case. The difference between them shows up when the path curves.
A worked example: the jump
Now take a price that sits at 100 for a long time and then jumps to 110 and stays there. This is the cleanest test of any smoother, because the right answer after the jump is simply 110.
| Bars after the jump | EMA (10) | DEMA (10) | TEMA (10) |
|---|---|---|---|
| 1 | 101.82 | 103.31 | 104.52 |
| 3 | 104.52 | 107.51 | 109.41 |
| 7 | 107.55 | 110.67 | 111.52 |
| 10 | 108.66 | 111.10 | 111.10 |
| 20 | 109.82 | 110.48 | 109.88 |
Three bars after the jump the TEMA has covered 94% of the move while the EMA has covered 45%. But by bar 7 the TEMA has gone to 111.52, 1.52 above the new price, an overshoot of about 15% of the jump. It then sinks back, briefly dipping below 110 before settling. The DEMA's overshoot is smaller (to 111.10, about 11%) and later.
That overshoot is not a bug. A smoother that projects the recent slope forward will always over-project when the slope suddenly stops.
TEMA on real data: Tesla in 2026
Tesla (TSLA) gave a vivid example. From a close of $420.60 on June 30, 2026, the stock fell to a low of $297.38 on July 29, a decline of about 29% in a month.
The TEMA followed the slide almost bar for bar. The EMA trailed far behind. On July 29 the close was $298.32, the TEMA (10) $293.97 and the EMA (10) $336.29, $38 above the close. The next day Tesla rebounded to $308.85, but the TEMA kept projecting the slide and fell to $293.77, now $15 below the close. That is the jump illustration playing out in reverse: the TEMA overshot the bottom.
From there the TEMA turned up quickly. It crossed above the EMA (10) on August 11 at a close of $332.81, and Tesla was 10.5% higher 20 sessions later. But the same speed made the six months noisy: Tesla's close crossed the TEMA (10) 43 times and the EMA (10) 28 times.
How traders use the TEMA
Very short-term trend. The TEMA is mostly used by short-term traders on intraday or daily charts who want to see a change in direction at the earliest possible bar.
TEMA versus a slower average. A popular construction pairs a TEMA with an EMA or SMA of the same length. The TEMA crossing above the slower line is an early sign that recent momentum has turned up. The Tesla chart shows how often such crossings occur, which is why most rules add a filter.
Smoothing other indicators. Like the DEMA, the TEMA can replace the EMA inside other tools to make them faster. TRIX, despite the similar name, does something else: it plots the one-bar percentage change of E3, the slowest layer, which makes it a smooth momentum oscillator rather than a fast average.
Pitfalls and limitations
Overshoot at turns. As shown above, the TEMA can sit below the lows near a bottom and above the highs near a top. Do not treat it as a support or resistance line the way you might a 50-day SMA.
Noise. Cancelling lag means passing through more of the recent wiggle. On a quiet, range-bound stock a TEMA (10) can cross price nearly every other day.
Long start-up. Three layers of smoothing need more history to settle than one. Charts that start the calculation on the first visible bar can show a distorted TEMA for the first few dozen bars. Finabase computes from a longer history than the range you view.
Comparison with related averages
| Average | Speed after a jump (bars to 90% of move) | Overshoot after a jump | Typical use |
|---|---|---|---|
| EMA (10) | 12 | None | General trend line |
| DEMA (10) | 5 | About 11% | Faster trend line |
| TEMA (10) | 3 | About 15% | Fastest timing |
| SMA (10) | 9 | None | Consensus levels |
The bar counts come from the 100-to-110 illustration above, computed with α = 2 ÷ 11.
How Finabase calculates and scores the TEMA
Finabase computes the TEMA with TA-Lib's TEMA function on closing prices. The study
appears as "Triple Exponential Moving Average" and defaults to 10 periods; any period
can be set. It is drawn on the price chart as an overlay.
In the technical gauge, TEMA (10) is one of the overlay rows: a close at or above the line counts as Bullish, below it as Bearish. The Scanner tracks the same TEMA (10) and lists stocks whose close crossed it, with the date. Given how often the TEMA is crossed, read those signals as a description of the last few bars, not a trend verdict.
Frequently asked questions
What is the difference between TEMA and TRIX?
The TEMA is a moving average that combines three EMA layers to track price closely. TRIX is an oscillator: the percentage change of the third EMA layer alone, which is very smooth and slow. They share ingredients but answer different questions.
Is TEMA better than DEMA?
It is faster and overshoots more. On the jump illustration the TEMA reached 90% of the move two bars sooner than the DEMA and overshot by about 15% instead of 11%. Which is better depends on whether you value the earlier bar more than the extra false signals.
What is a good TEMA period?
Ten is Finabase's default. Traders on daily charts often use 9 to 30. Because the TEMA reacts so quickly, a longer period than you would use for an EMA is often a better starting point.
Summary
The TEMA weights three layers of exponential smoothing, 3, −3 and 1, so that their lags cancel and the line tracks price almost without delay. The cost is overshoot: about 15% of a sudden move, and on Tesla's July 2026 low a TEMA that fell $15 below the close as the stock bounced. Use it for the earliest read on direction, pair it with a slower average, and expect many more crossings than a plain EMA gives.
Sources and further reading
- Patrick G. Mulloy, “Smoothing Data with Less Lag,” Technical Analysis of Stocks & Commodities, vol. 12, no. 2 (February 1994) — the TEMA
- Robert G. Brown, Smoothing, Forecasting and Prediction of Discrete Time Series (Prentice-Hall, 1963) — triple exponential smoothing
- TA-Lib — TEMA function reference
- Finabase chart data — TSLA daily bars, 2026-04-30 to 2026-10-29, TEMA and EMA computed by Finabase