Example of an Exponential Moving Average (EMA)

The exponential moving average may indicate an uptrend or a downtrend. It is a trend indicator.
A bullish signal is generated when prices move above the EMA, so make a long. A bearish signal is generated when prices move below the EMA, make a short.

The EMA works very well in long trends, however, does not work well in lateral movements or short periods and in those cases EMA gives false signals.