Immersed in the basics of technical analysis, we finally got to the charts that are so afraid of pioneers in crypto-Analytics. In the last article we talked about the volume indicators, relative strength and support of the Zigzag indicator. Today we will consider several tools to understand and predict the behavior of the cryptocurrency market.
Moving averages (Moving average)
As popular as Volume. Indicator function analyzes the average prices for a selected time interval. Graph superimposed over a graph of the current price movement, which gives a relative indication of overall price trends.
If the actual price of the cryptocurrency for a long time holding above the moving average, we can assume that it will continue to grow. Accordingly, a drop below the moving signal for decrease of the asset price.
For more accurate predictions, it is desirable to use multiple moving averages based on different time intervals. In the event of a dispute the true is considered to be average based on a longer period of time. If the signal from multiple moving averages are the same, we can talk about a fairly accurate forecast.
MACD (Moving Average Convergence Divergence)
Having trained in one moving average, proceed to the complex analysis of this indicator. The MACD tool analyzes the convergence and divergence three moving averages and could signal the beginning of a new trend.
Note the graph at the bottom of the picture: at the points where the lines intersect, there is a reversal of the price movement (which is confirmed by the price chart above).
MACD also works well on different time frames and is a fairly simple and popular indicator of technical analysis.
CCI (Commodity Chanel Index)
CCI or commodity channel index, as the relative strength index (RSI), which we wrote about in the previous article, helps to assess the overbought or oversold of the asset. This schedule with values ranging from negative 100 to plus 100 is displayed under the current schedule and can be used on any time frames.
The CCI indicator is above a hundred means that the asset is overbought and that the coming decline in prices, in contrast, the CCI index below minus one hundred indicates the oversold of the asset and the likely growth rates.
This tool also belongs to the oscillators and used during the sideways trend when there is no clear idea how the price will behave soon.
ADC and DI (average directional movement index and directional movement index)
Indicator ADC and DI is the index of the average direction and direction of movement signals of a trend change. Looks on the chart as three lines: red bears, green for bulls, blue (on different platforms can be other colors) — the strength of the trend.
This indicator is fairly reliable in the four-hour and daily frames. If the line of force of the trend is in the range of 10-20 points, this suggests that the trend is gaining strength, if the figure reaches 60-80 points, waiting for the correction of the trend. Green and red lines show who sets the market mood is bullish or bearish. If the green line crosses the red, the trend is bullish, and Vice versa.