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Best Technical Indicators for Cryptocurrency
Before selecting a technical indicator for cryptocurrency trading, you should consider some factors below:
Signal interpretation: The best indicator is the one that interprets each signal. Even if used correctly, an indicator that generates false signals is not worth your trading strategy.
Delays: Ask yourself before using an indicator, ask it quickly, or are there delays in its performance? An indicator that takes longer than usual to predict changes in prices and trend movements may not be fertile to you.
Your crypto concept: Even if you are a beginner or a professional, you cannot use an indicator until you have a good understanding of your cryptocurrency. If you do not have it, you can eventually use it incorrectly and generate false results for your trading strategy.
Now that you know how to choose a suitable indicator, the list of our top 10 technical indicators for cryptocurrency.
Rsi
RSI or relative strength index is a technical indicator that measures and identifies the weakness and strength of a specific asset during a change in price. This analysis helps to evaluate whether an asset has been oversold or too much bought.
Below is the formula used to calculate RSI for Crypto trading:
RSI = 100-100/1+Rs
RSI is the average periods that include prices divided by the average periods that show a fall in the price. Most times, traders use 14 periods, but it all amounts to individual preferences.
For example, if the value of RSI is below 30, it indicates that a specific asset has been sold too much. Alternatively, if its value is 70, the asset was bought too much.
Rsi
Here are some good and disadvantages of this indicator
• Easy to implement
• Effective to detect the minimum loss of momentum
• Designed to work in most non-trenching zones
• Ignore the volume completely during key turnaround levels
Stochastic oscillator
Stochastic oscillator is designed to be a momentum indicator and compares a specific closing price of a cryptocurrency with a wide range of prices during a specific time. The indicator generates oversold and overbought trading signals using specific values.
Below is the formula used for this indicator:
Slow %K = 100 [Sum of the (C – L14) for the %K Slowing Period / Sum of the (H14 – L14) for the %K Slowing Period] Slow %D = SMA of Slow %K
C = latest lock
L14 = lowest layer in the last 14 days
H14 = highest high for the same period
%K delay period is 3
One of the best things with this indicator is that you do not have to measure it by hand. Instead, trading platforms and map software will automatically calculate the formula for you.
Stochastic oscillator
Here are some positive features and disadvantages of the stochastic oscillator indicator.
• Clear exit and entry signals
• Signals occur regularly
• Indicator available on many mapping packages
• Can generate false signals if used incorrectly
Obv
OBV or on the Balance Volume uses the volume of an asset to predict price changes. Furthermore, it also determines the strength of a signal to sell or buy an asset.
This indicator is often used as a cumulative tool. For example, if the price of an asset closes, the day’s volume is added to the total of OBV.
However, if the price of an asset closes, the day’s volume of the total of OBV is deducted. If the price stays the same, no calculations happen.
Obv
Here are some good and bad points of this indicator:
• Considered a leading indicator
• Performing well during a good, trending markscenario
• Works well to identify deviations
• Can deliver false signals if used for short timeframes
• Not suitable for scalping
Ay
The Aroon indicator also measures the strength of the trend and evaluates all the changes in the price of an asset. In addition, it also measures the time between highs and lows over a certain period.
This is the formula for this indicator:
Aroon up = 25 period since 25 period high/25*100
Aroon down = 25-period since 25 period low/25*100
This calculation follows the low and high prices during the last 25 day period. To be accurate this calculation, you must measure the number of periods in the last lows and highs. After finding it, use it in the above formula.
Ay
Here are some advantages and disadvantages of using this indicator.
• Help define an overall trend
• Accurate for long-term and short-term trade
• Generate signals of good quality
• Can sometimes produce deterioration signals.
Adx
ADX or average directional movement index is also a fantastic indication to measure the overall strength of a specific tendency. This measures the average of the growing range of price values.
The formula of this indicator is fairly simple. You just need to take the average of ADX values over a certain period. If an ADX is more than 25, that means a strong trend. Alternatively, if an ADX is under 20, there is no tendency.
In some cases, you can also see that the ADX is dropping. This means that an inevitable trend can become weak. However, if ADX increases, it indicates that the trend is strengthening.
Adx
• Readily available on all famous trading platforms
• Can also be used with other indicators
• Easy to use
• Can show wrong signals if used alone
• Not suitable to be used in all market conditions
Ichimoku Cloud
This indicator is a collection of different indicators that display resistance levels and support. In addition, this indicator also shows trend direction and momentum.
How does this indicator reach it? First, it measures multiple averages and draws it all on a map. In addition, the indicator uses these values to create a cloud that predicts the time in which a price can find resistance and support.
The Ichimoku cloud indicator has five rules, and each has its own formula.
Conversion line = 9-Ph+9-PL/2
Baseline = 26-pH+26-pl/2
Leading Team A = Cl+ Baseline/2
Leading Team B = 52-Ph+52-Pl/2
Laughing team = close to stiff 26 periods
In this formula is the:
Ichimoku Cloud
• Measure support and resistance level
• Strong indicator
• Are used for different market trends
MACD
MACD or moving average convergence or divergence is a simple indicator to use. In addition, it is also very effective when it comes to providing strong trading signals for crypto. It is a tendency indicator that measures whether or not the direction of the short and long -term momentum is the same.
This indicator has four components:
MACD -line
Signal line
Histogram
Zero line
Below is the formula for this indicator:
26 Period EMA (Exponential Moving Average) – 12 Period EMA (at closing prices)
A positive MACD means an upward momentum. Alternatively, a negative MACD indicates a downward momentum.
MACD
Here are some positive and negative points of using this technical indicator.
• Easy to use
• Measure trend conveniently
• Can be conveniently used with other indicators
• Can generate false reversals.
Fibonacci retraction
What does this indicator do? Fibonacci omtrek predicts the resistance and support levels for the action price of an asset. This indicator is a little complicated to use, but it can help you understand the price actions if applied correctly.
The formula for this indicator is as follows:
Ur = high price- {[High Price-Low Price]*percentage}
This formula is for the upward market trend. For the downward market trend, you can replace the initial high price with a low price.
Fibonacci retraction
• Offers accuracy
• Easy formula
• Available for both upward and downward market trends
• Can produce false results if used incorrectly.
Bollinger Bands
This indicator determines the price movement of an asset within a certain band. The indicator can move the lower and upper tires in accordance with fluctuations in price.
Thus, if the price of the asset moves beyond the lower and upper tire, it means that a price reversal can happen. Here are the formulas used for all ties.
Midduit: SMA or simple moving average of 20 days
Upper Band: SMA in 20 days+(price deviation over 20 days *2)
Lower Band: SMA in 20 Days- (Price Deviation over 20 Days*2)
Bollinger Bands
Here are the advantages and disadvantages of this indicator.
• Easy to use
• Help identify new trends in the market
• User -friendly indicator
• Do not predict price patterns
• Should not be relied on on the use of this indicator alone
MyC trading indicator
Our final popular indicator is the MyC trading indicator. This unique private predictor uses a powerful combination of momentum ossillators and pattern analysis to evaluate when a cryptocurrency reaches a clumsy or bullish period.
You can access this indicator by contacting the official website [email protected].
MyC trading indicator
• Accurate indicator
• Easy to use
• Private so that access can be difficult
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Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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