5 Trends To Watch In Cryptocurrency Technical Analysis.
Do you know what the most powerful trends in the cryptocurrency world are? Cryptocurrency technical analysis is a field that helps us identify these trends. Technical analysts collect information from different sources, such as price movement, volume, open interest and other factors to find out where a cryptocurrency’s price is going. To become a successful trader you need to be able to identify the most important changes on your own.
Hence, it’s important to be familiar with how cryptocurrency technical analysis works so that you don’t lose your hard-earned money in the market. This article will teach you about five of the best trends in cryptocurrency technical analysis that every crypto trader should keep an eye on.
Moving Averages
The first and most obvious trend to watch in cryptocurrency technical analysis is moving averages. Moving averages are lines drawn on a chart that represent the average price of a stock or the average price of the asset over a given period of time. Moving averages are used to identify trends because they move in relation to the price of an asset. For example, if you have a fifteen-day moving average, it will be higher than the current price by 15 days.
Many traders use moving averages as support or resistance levels because they’ll help remove emotion from trading decisions. Therefore, traders should consider using these moving averages as points where they can take profits and stop losses for their trades.
However, there are some drawbacks with using moving averages in cryptocurrency technical analysis because there is a greater chance that it will fail when you enter your trade.
The Simple Moving Average
The Simple Moving Average is a popular indicator that is used by technical analysts to determine the momentum of a coin or crypto's price movement. It's a price-weighted average of the past X number of prices and provides us with an indication of how many times a certain price has increased or decreased in the past.
The simple moving average is calculated by adding the most recent value to the sum of the previous values and dividing it by X-1.
For example, if you were to use the SMA for Bitcoin, you would calculate the current value as follows:
SMA (Close) = (Price(X) + Price(X+1)) / 2
SMA (Close) = (1052 + 1053) / 2
SMA (Close) = 1077 / 2
SMA (Close) = 522.5
Therefore, SMA in this case will be at 522.5 because it's based off one period back and two periods forward.
The Exponential Moving Average
The exponential moving average (EMA) is one of the most popular indicators for technical analysis. It's a moving average that starts out with an arbitrary value, called the input period. Ex: The first 30 days of a month. In this case, it would be 0. An EMA then calculates the difference between its current value and the previous EMA, then divides it by the difference in the price. So if we have an EMA set at 50, and the price goes up to 100, then 50/100 = 0.5, which means that every time there is a move of 20% or more on either side of the current trend, there will also be a 20% change in this indicator.
MACD
The MACD is a moving average convergence/divergence indicator. It is an indicator that calculates the difference between two moving averages to determine whether the price of a security is trending up or down. The MACD attempts to smooth out volatility by identifying shifts in momentum and outright reversals.
RSI (Relative Strength Index)
The Relative Strength Index (RSI) is a momentum indicator that tracks the speed and change of price movements. It is commonly used as an oscillator, to help identify overbought or oversold market conditions.
For more information, follow Kaizilla Token on Medium.
