In the past story or lesson, we had told you about the moving averages concept and the difference between simple moving averages and exponential moving averages, and also, the importance when we are making money in the cryptocurrency market.
In this opportunity, we will show you which moving averages are most relevant for making money within the market. Then, pay attention to the following lines, since, they could change your trade strategy when you operate cryptocurrencies in short-term, medium-term and long-term.
What are the moving averages that are really useful?
Looking at the cryptocurrency market, it has been observed that for security purposes, the moving averages that best describe potential signals in the short-term, medium-term and long-term are the exponential moving averages.
The clear reason for this is because the exponential moving averages represent a better review of resistance and supports over time.
In addition, and if we look carefully, we can look that the cryptocurrency market has an exponential behavior, difficult to predict and not linear in time, due to high volatility. For this reason, exponential mobile averages represent a better price action.
Which moving averages should we really use to make money?
The one biggest traders mistake is to use too many moving averages in their operations.
In the crypto market doesn’t work as well as we think, because there is always a great uncertainty over time and too many variables that make the prices change easily from one day to the next. Which, in a way, that causes technical analysis to fail quickly.
Therefore, the first tip is that:use less moving averages to trade.
Less is better than more
From our experience the best moving averages that fit the cryptocurrency market are:
EMA9: If we take the Bitcoin chart as a reference, we can see that the EMA9 always follow the price and the short-term movements.
When the price is above this moving average it means a buy signal and when it is below it means a sell signal.
EMA21: For many years, EMA21 has been the most studied in the cryptocurrency market. That, because it represents a price action of protection for the buying and selling force.
It is understood that when the price is above this moving average it means that the price will seek short-term buyer targets and and when the price falls below, it means that it will look for sales targets and a possible next support.
It has seen the panic that has generated when the price is below this moving average. For example, in the Bitcoin weekly chart it is one of the most careful. And why? Easy, the word “panic” says it all; you believe it, don’t you?.
EMA50: it is seen as an important support, and also with a cross resistance to search for medium-term purchase targets.
The purchase signal is given when the price is above this moving average. But for this study purposes, we will say here that it is a continuity sign.
On the other hand, when the price falls below, the market starts to trigger the first alarms. Panic begins to be generated with a greater degree.
EMA200 & EMA300: do you want to see how to make the market go into extreme panic sell? Just let the price reach those moving average in sales action. 😂 believe it! It’s too funny when that happens xD lol.
But on the positive side, when the price is positioned above these moving averages, it means that it is looking for long-term purchase targets. So, seeing this, continuity resistances for the price are also considered.
Then, as a second tip is:always protect your earnings by closely studying the EMA21, EMA50, EMA200 & EMA300.
Those ones are the ones that mark security in a positive case and trigger market alarms in a negative case.
From the author’s own experience and for many newbies, the loss or gain of money begins knowing this primordial advice.
In the end, nobody was going to tell you that doing financial operations would require knowing what you just learned and much less that it would be easy.
See you in the next lesson story 😎!!!
Disclaimer: In no way does this article recommend the purchase of any assets, this is a personal opinion of the author. Investment in cryptocurrency is extremely risky and volatile. Also, if you are an investor, always do your own research before investing in anything!
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