5 Basic Indicators Used in Cryptocurrency Trading
1. Moving Averages
Moving averages show the overall trend in the market by averaging the price over a specific time period. Simple moving average (SMA) and exponential moving average (EMA) are among the most commonly used types. While SMA takes prices over a particular period with equal weight, EMA puts more emphasis and reacts faster to recent prices.
2. RSI (Relative Strength Index)
The RSI identifies overbought or oversold conditions by comparing gains and losses over a specific time period. An RSI value above 70 is interpreted as overbought, and below 30 as oversold. RSI can assist traders in identifying strong momentum and possible trend changes in the market.Moving averages show the overall trend in the market by averaging the price over a specific time period. Simple moving average (SMA) and exponential moving average (EMA) are among the most commonly used types. While SMA takes prices over a particular period with equal weight, EMA puts more emphasis and reacts faster to recent prices.
3. MACD (Moving Average Convergence Divergence)
MACD measures the difference between two moving averages and compares them to the signal line, which is a moving average of that difference. This indicator is used to identify trend changes and momentum. Crosses between the MACD line and the signal line are interpreted as buy or sell signals.
4. Bollinger Bands
Bollinger Bands measure the volatility of an asset. It is generally thought that when the price is inside the bands the market is calm, but when it goes outside it is considered to be an overbought or oversold situation. Bollinger Bands are used to identify potential trend reversals and volatility increases.
5. Fibonacci Retracement
Fibonacci Retracement measures retracements that occur after a specific price movement. These levels are used as support and resistance levels. Traders often use Fibonacci levels to analyze price movements and identify possible support/resistance levels.
