Nowadays, people all around the world have adopted cryptocurrencies at an enormous scale. These virtual assets have emerged as a great instrument of trading. All the people want to know the best trading strategies to make the maximum profit.
For this, they need to have knowledge of some technical indicators which are required to determine the trading strategies. A good blockchain magazine can help with these technical indicators.
Almost all the experts make use of technical indicators while trading in cryptocurrencies. In this article, I will tell you about all the cryptocurrency technical indicators that are being used in the crypto industry.
What Are Cryptocurrency Technical Indicators
Before understanding different types of technical indicators, it is essential to know what are technical indicators. Technical indicators are some overlays and additions on cryptocurrency prediction charts, giving additional information through mathematical calculations on value and quantity.
Technical Indicators For Stock Trading
All the traders make use of cryptocurrency technical indicators to determine both the long term and short term price direction of a digital asset. Technical indicators can be used to measure each and every aspect of the crypto market, such as the volume, quality, price, momentum and many others. All these indicators are signs, or mathematical calculations meant for technical analysis.
Types of Technical Indicators
Generally, there are four basic types of technical indicators. Each of them holds a unique importance in the crypto market. All four of them cover various aspects of the crypto market.
- Volatility – Volatility indicator apprises you about change in price in a provided time. It is the most notable indicator in the crypto market.
- Momentum – Momentum indicator informs you about the strength of a trend. It can also determine whether a reversal could happen.
- Volume – This indicator tells you about any variation in trading volume, like the number of Bitcoins sold and brought over time.
- Trend – Trend indicator indicates you about the direction the market of cryptocurrencies is moving to. It is also known as an oscillator.
Now, I will tell you about all the indicators that come in these primary types of technical indicators.
Some Best Technical Indicators
1. Bollinger Bands
Bollinger Bands come in the category of volatility indicators. It includes a simple moving average, with two lines plotted at two standard deviations which can be seen on any side of the centrally moving average line. The outer lines then form the band. Crypto market is quite when this band becomes narrow. When a band becomes wide, it signifies that the market is booming.
2. Ichimoku Kinko Hyo
Ichimoku Kinko Hyo is also referred to as Ichimoku Cloud. This indicator is a combination of lines plotted on a chart. This indicator’s main goal is to predict future price momentum. Also, it concentrates on areas of resistance and future support.
3. Relative Strength Index (RSI)
RSI comes in a category of momentum indicator where plotting is done on a separate scale. The Relative Strength Index has a range from 0 to 100, indicating overbought and oversold situations in the market of cryptocurrencies.
4. Moving Average Convergence Divergence (MACD)
MACD comes in a category of the trend indicator, and it consists of a slow line, a fast line and a histogram. This indicator’s inputs are a slower-moving average (MA-slow), a faster-moving average (MA-fast), and a number implying the period for another moving average (MA-period).
5. Parabolic Stop and Reverse (SAR)
Parabolic Stop and Reverse is a trend indicator, which displays several dots above or below the price, indicating price movement’s potential direction. In an uptrend, the indicator is shown as dots below the price bars. In a downtrend, the indicator is displayed as dots above the price bars.
6. Average Directional Index (ADX)
ADX is a trend indicator, with a scale from 0 to 100. It gives you the signal of trend strength. ADX under 20 indicates a weak trend, while ADX beyond 50 shows a strong trend. In this indicator, the pattern is followed by the Positive Directional Indicator and Negative Directional Indicator
Stochastic appears in the category of momentum indicator. This indicator is very similar to the RSI. It is used to determine the overbuying and overselling of an asset. The stochastic indicator is generated by plotting two lines on separate charts. You can remove fakeouts with the help of Stochastic indicator.
In this article, we have gone through all the cryptocurrency technical indicators. All of these work on different aspects of the cryptocurrency market. Technical indicators have been used by several expert traders while buying and selling their digital currencies. Although none of them is able to provide a cent per cent accurate prediction, each can give some sign about whether the market is in good condition or in bad condition. Several crypto technical analysis today have gained a significant place on the internet. At last, I would like to say that everyone should make use of these technical indicators while buying and selling their virtual assets.
Sujit received his Bachelors in Science from the LNMU Darbhanga. He is currently working as a Freelance Digital Marketing specialist. He has more than three years of professional experience in information systems, security policies, technologies, and Cryptocurrency. He has published 6 books in the area of information security and assurance. He has published more than 50 research articles in leading journals Regarding the Latest and Breaking Crypto News and updates. His research interests include access control, computer forensics, Digital Marketing, Web development, business hacks, player experience, and virtual storytelling.