Stochastic Momentum Index Bitcoin Analysis & Stochastic Momentum Index Signals

Developed by William Blau.

Stochastic Momentum Index, SMI is an adaptation of the classic Stochastic Oscillator which smoothens out the stochastics oscillations.

Stochastic Momentum Index Bitcoin Indicator - SMI BTCUSD Indicator

Construction of Stochastic Momentum Index Technical Indicator

This btcusd indicator is calculated by comparing the bitcoin price compared to average mean of an n number of periods.

Then instead of plotting these values directly, smoothing using an Exponential Moving Average is applied & then the values drawn to form the SMI.

When the closing bitcoin price is greater than the average of the range, the SMI will move up.

When the closing bitcoin price is less than the average of the range, the SMI will move down.

This oscillator ranges between the values of +100 and -100, this indicator also is less prone to whipsaw fakeouts compared to the stochastic oscillator trading indicator.

Bitcoin Crypto Currency Analysis & Generating Signals

Buy and Sell Bitcoin Signals/ Crossover Signals

The Stochastic Momentum Index can be used to generate buy & sell cryptocurrency signals using the method shown below, Buy when the SMI is heading upwards & sell when its heading downwards.

Buy and Sell Bitcoin Signals Cross-over Signals - SMI Indicator

Buy and Sell Bitcoin Signals/ ==22==CrossoverCross-over Signals

Overbought/Oversold Level Bitcoin Crossovers

Overbought levels above +40
Oversold levels below -40

Buy signal is generated/derived when this oscillator falls below ==22==oversoldover-sold level & then rises above this technical level & begins to move upwards.

Sell Bitcoin Signal is generated when this oscillator rises above overbought level ==22==& then falls below this technical level & starts and begins to move downward.

Divergence BTCUSD Trading

The example illustrated below indicates a bearish classic divergence between the bitcoin price & the SMI. When the Stochastic Momentum Index showed this divergence the bitcoin price trend reversed and started to move in a downward direction.

Bearish Divergence Stochastic Momentum Index Crypto Indicator - SMI BTCUSD Indicator

Bearish Bitcoin Trade Divergence

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