What it is
The 21-day exponential moving average covers about a month of trading. An exponential average weights recent days more heavily than older ones. Swing traders treat this line as the level a healthy trend should hold. Pullbacks touch it and bounce. A close below it is the first real warning. The exponential version reacts a little faster than a simple average. That is why most momentum traders watch this one.
How Breakaway uses it
The 21 EMA check fires when two things are true. The stock closes above its 21-day EMA. And that average is higher than it was five trading days ago, so the line itself is rising. Once lit, it stays lit until the close is more than 1.5 percent under the line, or the line falls more than 0.375 percent under where it was five days before. The distance from it appears in key stats as "vs 21 EMA". A stock 15 percent above the line has already run far. One sitting just above it is at a place where risk is easy to define.
How to read it
Read it with the regime, which says whether the stock is trending or choppy. A stock above a rising 21-day inside an uptrend is behaving normally. The same reading in a choppy stock means little, because the line itself is going sideways. When the chip goes dark on a stock you own, check the volume. Barely under the line on light volume is usually noise. Well under it on heavy volume is often the end of the move.