The use of moving averages in cryptocurrencies

The use of moving averages in cryptocurrencies. Source: Pixabay
The use of moving averages in cryptocurrencies. Source: Pixabay

Key takeaways:

  • Moving Averages will help steer your trading ship.
  • Current Bitcoin chart for visualization.
  • Study more than one trading factor, but not too many!

Moving Averages (MA) are a popular indicator for professional traders in all financial markets. Although MA’s are a lagging indicator or an indicator of previous price action, they still reveal much about future direction.

With cryptocurrencies, technical indicators are best used with more established tokens such as Bitcoin, Ethereum, BNB, and the like.

When one uses technical indicators on low-volume cryptos, it simply reduces the value of the intent. Widely used moving averages are 50-day, 100-day, and 200-day. H1 (one hour) charts are more for day traders, while D1 (daily) charts carry long-term usefulness.

Bitcoin Chart with Moving Averages

Let us look at Bitcoin with all three moving averages mentioned above, which will provide clues to the next price direction. This chart leans to newer traders as professionals use these like they breathe air, but the knowledge is invaluable as no one knows future prices in any financial market.

BTC daily price chart featuring moving averages
BTC/USD daily price chart featuring moving averages. Source: TradingView

Other Influencing Factors

In addition to studying moving averages, one must be aware of other influencing factors, such as current news.

Technical indicators are wonderful tools but must be used alongside current information. For example, Coin Chapter author Anshuman Roy recently wrote an article identifying an important aspect of Bitcoin most of us were not aware of.

These news articles with indicators are critical to protecting your investments; together, they give one confidence to make correct decisions.

When deciding on one’s most trusted indicator, please remember the importance of not over-do-it. There is no need to use too many indicators, as most are lagging. In addition, applying multiple indicators all at once will create confusion.

As of late, Bitcoin is suffering the ability to take off and soar in price – this is no secret to anyone. As seen above, putting a chart before you help identify what is going on long-term.

Although Coin Chapter gives no trading advice, it is evident that being a buyer of Bitcoin shortly is risky. Perhaps waiting for the 50-day and 100-day MA’s to be pierced and held is the safest decision.

Since you’re here, click here to find out why Luna Classic (LUNC), a rehashed version of the now-dead Terra project, surged approximately 200% recently.

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