Traditionally, all traders pay attention to technical analysis, working with their assets. But what to do when you are not trading in ordinary stocks, bonds, securities, or currencies, but entering the cryptocurrency market? In fact, decentralized exchanges have both specific and traditional crypto indicators that work just as well in this area.
MACD is one of the best indicators in crypto trading. This shows the “energy of the trend”, i.e. the potential of bulls or bears to support a particular trend. MACD fluctuations are especially valuable when viewed on large graphs: weekly, daily, or 4-hour. The best time to buy is a bull cross, which is formed when the signal line intersects with the MACD moving up. In turn, the bear’s cross, when the MACD line intersects with the signal line, moving down, is the best time to sell assets.
If you want to determine the state of the market and the current strength, the RSI indicator is best. These values are calculated based on price fluctuations, and allow you to clearly identify areas of overbought or oversold assets, and thus decide how to deal with your cryptocurrencies.
RSI is calculated by a clear formula, and as a result, you get a certain value. If this number is less than 30, it indicates an oversold asset. If the result is higher than 70 – this is a clear signal of overbought. This is how you can understand whether it is time to sell or vice versa, you should open a deal to buy cryptocurrency.
The OBV indicator works equally well for securities, stocks, and cryptocurrencies. Forecasting is based on the volume flow of the selected asset type. This is a cumulative indicator:
● The price has not changed – no calculations are made.
● The price of the asset has closed – the volume of trade for a particular day is added to the total volume of OBV.
This is a simple scheme that helps to clearly track the volume pressure and note the chances that the price will continue to rise. Or, when you see a low high on the chart, and it does not fall into the support zone, you will realize that the price of the crypto asset will soon fall.
Bollinger Bands is an indicator developed in the 80s, but now is one of the most relevant in the cryptocurrency trading industry. Now it is mainly used as an auxiliary indicator. When it comes to 20 SMA, it serves as a hint to move to the position. On the graph, it looks like three curved lines. A break of the top signals a purchase, and a break of the bottom line indicates a sale. After the impulse near one or another curve, the next cycle of market movement begins. The greater the volatility, the more serious the gap between the curves on the graph.
We have discussed only the most popular indicators, but in fact, there are more. However, you do not need to analyze all the indicators for successful cryptocurrency trading. It is important that the key indicators you are focusing on show roughly the same picture, and then this will be a sufficient basis for making a decision to buy or sell. Try different options and choose the ones that work best for you and help make your business more productive and profitable.