There are various technical indicators which are important for identifying different trends in the movement of the price of certain assets. Bitcoin is not an exception. 

Perhaps one of the most popular, as well as often-used one of them is the moving average. It’s fairly easy to calculate and once you plot it on a chart, it becomes a very prominent trend-spotting took, hence, why it is so important.

What is a Moving Average (MA)?

A moving average is an average price for a certain asset over a specified period of time. One of the most popular MAs is the day moving average.

In order to calculate Bitcoin’s day MA, one would have to take the closing prices of Bitcoin for the last days and add them together. This number is then divided by In order to continue to calculate the MA on a daily basis, one would only have to replace the oldest number with the most recent closing price.

Irrespective of the time period, the calculations are always the same. It’s also important to note that traders can also use different prices to get moving averages on a shorter or longer time frame — such as weekly, monthly, opening, or even intraday prices.

Why is the Day MA Important?

As we mentioned in the beginning, moving averages are oftentimes used to identify a certain pattern or a trend in the movement of the price.

When the current price of a trading asset crosses below the moving average line, this can signal that bears are in control of the price action and, as such, you could interpret this as an indicator for assets further decline. Naturally, if the price crosses above the day MA line, it could potentially signal that bulls are dictating the price action again, at least for a certain period.

www.oldyorkcellars.coms is a trading platform using MetaTrader 5 trading software, offering most advanced functions and technical analysis tools. Traders are able to use a wide range of indicators in order to plot their further actions and determine their positions.

Using the Day MA Indicator: Entry and Exit Points

Besides identifying trends, moving averages can also be used to find entry and exit market points. In other words, traders can use these indicators to determine whether to invest or to liquidate existing positions.

One of the simplest trading strategies relies on the crossing of two, or, eventually, more moving average lines. The most basic signal is provided when the shorter-term moving average crosses above or below the longer-term moving average line.

So, if you’re using the Day MA as a powerful indicator, a cross of a shorter-term MA (such as the day MA), above it, could signal that a bullish trend might be developing, hence providing a good entry point for a long position.

Using the Day MA Indicator: Identifying Support and Resistance

Another very good use of the Day MA as a strong technical indicator is to signal early support or resistance levels.

For instance, if the price of Bitcoin tends to drift lower in a well-established uptrend, it wouldn’t be that surprising for it to find support at the long-term day MA.

Of course, if the price tends to trend lower, a lot of the traders will be looking for the price to bounce off the resistance of the day MA, which is considered to be a rather major one.

Wrapping it up

The day MA is one of the most powerful trend-spotting indicators because it paints the bigger picture. It provides long-term historic data of the price action and when plotted correctly, could be used for crafting a viable trading strategy.

It provides traders with the crucial tool to identify a current trend or to spot a trend reversal. It can also be used as a signal for incoming support of resistance level. Naturally, the way traders choose to use the day MA is entirely up to them, based on their previous trading experience.

What do you think about the day moving average? Let us know your thoughts in the comments below! 

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The day simple moving average (SMA) is considered a key indicator by traders and market analysts for determining overall long-term market trends. The indicator appears as a line on a chart and meanders higher and lower along with the longer-term price moves in the stock, commodity, or whatever instrument that is being charted.

The day SMA seems, at times, to serve as an uncanny support level when the price is above the moving average or a resistance level when the price is below it.

The Day SMA

The day SMA, which covers roughly 40 weeks of trading, is commonly used in stock trading to determine the general market trend. As long as a stock price remains above the day SMA on the daily time frame, the stock is generally considered to be in an overall uptrend. One frequently used alternative to the day SMA is a day moving average that represents the trading for the previous year.

As a very long-term moving average, the day SMA is often used in conjunction with other, shorter-term moving averages to show not only the market trend but also to assess the strength of the trend as indicated by the separation between moving average lines. For example, comparing the day SMA and day is relatively common.

When moving average lines converge, this sometimes indicates a lack of definitive market momentum, whereas the increasing separation between shorter-term moving averages and longer-term moving averages typically indicates increasing trend strength and market momentum.

Death Crosses and Golden Crosses

The day simple moving average is considered such a critically important trend indicator that the event of the day SMA crossing to the downside of the day SMA is referred to as a "death cross," signaling an upcoming bear market in a stock, index, or other investment.

In like fashion, the day SMA crossing over to the upside of the day SMA is sometimes called a "golden cross," referring to the fact that a stock is considered "golden," or nearly sure to rise in price once that happens.

SMAs vs. EMAs

It is possible that there is also something of a self-fulfilling prophecy aspect to the day SMA; markets react strongly in relation to it partially just because so many traders and analysts attach so much importance to the indicator.

Some traders, however, prefer to follow the exponential moving average (EMA). While the simple moving average is computed as the average price over the specified time frame, an EMA gives greater weight to the most recent trading days. That is, the exponential moving average gives a higher value to recent prices, while the simple moving average assigns an equal weighting to all values. Despite the difference in calculations, technical analysts use EMAs and SMAs in similar ways to spot trends and identify overbought or oversold markets.

Get most of Bitcoin (BTC) USD price analysis with interactive tools to study real-time chart patterns/ live price movement. Chart references Bitcoin (BTC) USD price live from Coinbase exchange.

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Technical indicators:

Technical Analysis through the use of charts or volume helps to forecast future Bitcoin (BTC) price trends, however, do remember always that analysis can&#;t make absolute predictions about the future. Therefore, trade with caution.

The following are some of the technical indicators which could be useful for anticipating the most likely Bitcoin (BTC) price movement.

Moving average convergence divergence (MACD)

MACD is calculated by subtracting the period Exponential Moving Average (EMA) from the period EMA. The result of that calculation is the MACD line. A nine-day EMA of the MACD called the &#;signal line&#;, is then plotted in addition to the MACD line which together functions as a trigger for Bitcoin (BTC) buy and sell.

Traders may buy the Bitcoin (BTC) when the MACD crosses above its signal line (orange line) and Sell, or short, the Bitcoin (BTC) when the MACD (blue line) crosses below the signal line.

Another MACD strategy is to look at which side of zero the MACD lines are. Potential buy signals occur when the MACD moves above zero, and potential sell signals when it crosses below zero.

• Above zero for a sustained period of time, and the trend is likely up or
• Below zero for a sustained period of time, and the trend is likely down.

Relative Strength Index (RSI)

RSI is an indicator that evaluates overbought or oversold conditions in the price of an asset. The RSI is a line graph that moves between two extremes and has a reading from 0 to Traditional usage of the RSI is that:

• Values of 70 or above indicate that an asset is becoming overbought and may be primed for a trend reversal or experience correction in the Bitcoin (BTC) USD price.
• An RSI reading of 30 or below indicates an oversold or undervalued condition.  

Bitcoin price Simple Moving average (SMA)

SMA is the average of the closing USD price of an asset &#; Bitcoin over a given number of periods. The day simple moving average (SMA) is one of the most-watched activities in the price charts by mostly all experienced traders. There are two basic signals in relation to the moving average:

• If the price is above the X day SMA, this signals a bullish movement.
• If the price is below the X day SMA this signals a bearish movement.

MA(50,) Crossover

Another important signal that these moving averages send is a crossover between the day and the day moving averages.

• Essentially, a bullish crossover (the day MA moving above the day MA) is called a golden cross and it signals that a new bullish BTC price trend is starting.
• A bearish crossover (where the day MA crosses below the day MA) is known as the death cross. This is a sign that a bear market may be starting.

On-balance volume (OBV)

OBV is another technical trading momentum indicator that uses volume flow to predict changes in the stock price. A rising price should be accompanied by a rising OBV; a falling price should be accompanied by a falling OBV.

• If OBV is rising and the price isn&#;t, the price is likely to follow the OBV and start rising.
• In case the Bitcoin (BTC) price against USD is rising and OBV is flat-lining or falling, the price may be near the top.
• If the Bitcoin (BTC) price against US Dollar is falling and OBV is flat-lining or rising, the price could be nearing the bottom.

Chart Patterns

• Head and Shoulders
• Cup and Handle (bullish)
• Triangles (Symmetrical, Ascending and Descending)
• Double top and bottom [M (bearish) and W (bullish)]
• Triple Top (bearish) & Bottom (bullish)

• Bitcoin is on the verge of completing a death cross, a bearish technical signal that suggests more downside ahead.
• The cryptocurrency is already down 40% from its mid-November peak of about $69,
• Katie Stockton of Fairlead Strategies sees $37, as a logical support level for bitcoin.

Bitcoin's 40% sell-off from its mid-November high amid a hawkish pivot from the Fed puts it on track to trigger a so-called death cross, a bearish technical signal that suggests more downside ahead.

A death cross occurs when the shorter-term day moving average crosses below the longer-term day moving average. That crossover signal is widely followed by technical analysts and traders.

With bitcoin's and day moving averages just $1, apart as of Tuesday morning, it is highly likely that the death cross signal will be generated over the coming days. Bitcoin's day average is falling fast, while its day average is slowly rising.

The lagging indicator can help alert traders to securities that are solidifying their downtrend and are likely to experience a continuation, resulting in lower prices. Bitcoin last flashed a death cross in June , when prices went on to fall nearly 20% before bottoming a month later.

But bitcoin is notoriously volatile, and previous moving-average crossovers have also led to several head fakes. In February , a bullish golden cross in bitcoin flashed right before prices fell as much as 56%. And a bearish death cross in March occurred two weeks after bitcoin prices bottomed. 

If the imminent death cross in bitcoin proves to be a successful trading signal, one logical area of support is $37,, according to technical analyst Katie Stockton of Fairlead Strategies. A move to that level would represent downside potential of 10% from current levels.

In a Monday note, Stockton highlighted that bitcoin is throwing off both bearish and bullish signals on an intermediate- and long-term basis, respectively. 

"If the monthly MACD indicator flips to a 'sell' signal, we would view that as a precursor to a breakdown and impetus to reduce long-term exposure," Stockton said.

The MACD indicator, short for moving average convergence/divergence, tracks moving averages but is separate from the traditional death cross between the day and day moving averages.

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Chart analysts are seeing an alarming pattern in bitcoin’s recent trends, one they call a “death cross.”

A death cross occurs when the short-term moving average, which is an average of which direction a security is moving, breaks below its long-term moving average. As that point, both short- and long-term moving averages tend to fall, so a “death cross” is a bearish signal indicating further losses.

The chart pattern is named after the cross shape that the moving averages make and the resulting downward spiral. It can occur in individual stocks or in various funds, as well as in other assets like cryptocurrency. (See also: Bitcoin Bloodbath: Price Nosedives as $53 Billion Wiped off Crypto Market Cap.)

Spotting a Death Cross on a bitcoin chart

With bitcoin, its short-term, day moving average is rapidly closing in on its long-term, day moving average. It’s the closest the two figures have been in nine months, and, if they cross, it would be the first time since

Above: A Death Cross occurs when the day SMA crosses the day SMA, which looks ripe to happen (image: Investopedia using Tradingview)

Some analysts say that the death cross is not a good indicator for timing. In other words, a decline is not necessarily imminent right when the short-term average slips below the long-term average. They also say that the death cross does not guarantee future declines, as other market forces can drive the security – or currency – higher.

Bitcoin, a volatile asset, has had a rough week, sliding on growing concerns about regulation, including in the U.S. and Japan. (See also: Bitcoin May Be Spared in Government Cryptocurrency Crackdown.)

The value of the bitcoin briefly slipped below $8,, but has since recovered. It’s up about 2% in early Friday trade, with its value at about $8, per U.S. dollar. (See also: Bitcoin Bubble ‘Probably Just About to Burst’ Says Allianz Global Investors.)

Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns no stake in bitcoin or cryptocurrency-related securities.