The 5 Effective Bitcoin Indicators That Bitcoin Traders Should Know
Many bitcoin traders will use different methods of bitcoin trading. One of these methods of bitcoin trading is the use of bitcoin indicators. Bitcoin trading indicators are technical bitcoin trading tools that are placed on bitcoin charts and help to determine the bitcoin trading price chart movement.
Among the most commonly used technical indicators are:
Moving Averages BTCUSD Trading Technical Indicator RSI MACD Bollinger Band Technical Indicator Stochastic Oscillator Bitcoin Trading Technical Indicator
These bitcoin indicators are used by bitcoin traders to identify bitcoin trends, analyze bitcoin trends and also analyze bitcoin trend momentum.
To trade with these indicators bitcoin traders will come up with a few bitcoin rules that will ascertain that this is when to open a bitcoin trade based on the specified bitcoin trading rules. These bitcoin rules form what is known as a bitcoin trading strategy.
This bitcoin strategy which is a set of bitcoin trading rules will be used by bitcoin traders when trading the btcusd market. To come up with a bitcoin trading strategy that is indicator based bitcoin trader will first need to know about these indicators used in the bitcoin trading market.
The five commonly used technical indicators are explained below:
Moving Averages Technical Indicator
Moving average bitcoin indicator is used to identify bitcoin trading opportunities by determining the overall trend direction of the market. Bitcoin moving average is drawn as a line that shows the average of bitcoin trading prices on the bitcoin chart.
When the bitcoin market is heading in an upwards bitcoin trend the moving average bitcoin technical indicator will also be heading upward.
When the bitcoin market is heading in a downwards bitcoin trend the moving average bitcoin technical indicator will also be heading downward.
Bitcoin traders will use two moving averages a shorter bitcoin period moving average and a longer bitcoin period moving average - bitcoin signals will be generated when both of these moving averages are moving in same direction.
An exit bitcoin signal is generated when moving averages start to move in opposite direction.
Bitcoin Trading with Moving Average Technical Indicator
RSI Technical Indicator
RSI indicator is used to determine if bitcoin trading prices are generally closing higher than where they opened or if bitcoin prices are closing lower than where they opened.
RSI indicator values above 50 signals that bitcoin trading prices are closing higher than where they opened RSI indicator values below 50 signals that bitcoin trading prices are closing lower than where they opened
When bitcoin trading using the RSI indicator bitcoin buy and bitcoin sell signals are generated when the RSI moves above or below the 50 center line mark - RSI indicator values above 50 is a buy bitcoin trading signal while RSI technical indicator values below 50 is a sell bitcoin trading signal.
The RSI indicator is drawn with values of between 0 and 100. RSI 50 is the center line mark used to generate bitcoin trading signals when the RSI indicator moves above or below this centerline mark.
RSI technical indicator areas below 30 are used to show over-sold levels RSI technical indicator levels above 30 are used to show over-bought areas
Bitcoin Trading with RSI Technical Indicator
MACD Technical Indicator
MACD indicator is used to analyze the momentum of bitcoin trends.
The MACD indicator is used to generate bitcoin signals when MACD moves above or below the zero center-line mark.
MACD indicator above Zero centerline is interpreted as a buy bitcoin trading signal. MACD indicator below Zero centerline is interpreted as a sell bitcoin trading signal.
MACD indicator is comprised of two lines - MACD line and MACD Signal Line - MACD line is drawn as a red line while MACD Signal line is drawn as a blue line.
Bitcoin Trading with MACD Technical Indicator
Bollinger Band Indicator
Bollinger bands bitcoin indicator uses a 20 period moving average as the middle Bollinger band and then calculate the bitcoin trading price movement magnitude from these moving average line using standard deviation.
When bitcoin trading price volatility is high the Bollinger bands will widen When bitcoin trading price volatility is low the Bollinger bands will narrow
When Bollinger bands widen the bitcoin trading price trend is likely to continue moving in the same direction whereas when Bollinger band narrow the bitcoin trading price is likely to breakout and move in direction of the bitcoin trading price break-out.
Bitcoin Trading with Bollinger Bands Technical Indicator
Stochastic Oscillator Technical Indicator
Stochastic oscillator bitcoin indicator is used to determine overbought and oversold levels. Stochastic oscillator values below 20 are interpreted as oversold levels and bitcoin stochastic oscillator values above 80 are considered as overbought.
Stochastic oscillator bitcoin indicator is made up of two line %K and %D lines which oscillate between values of 0 and 100. Bitcoin Trading with Stochastic Oscillator Technical Indicator
