If technical analysis (TA) overwhelms you, focus on these three indicators. They are the foundation for starting to understand and make smart decisions in cryptocurrency trading.
1. RSI (Relative Strength Indicator)
The RSI measures the speed and change of price movements. It tells you if an asset is "hot" or "cold".
What does it do? It measures the momentum. Key Points:
Overbought (RSI > 70): A signal that the price rose too quickly and may correct downwards.
Oversold (RSI < 30): A signal that the price fell too much and may bounce back upwards.
Quick Use: Look for buying opportunities when the RSI exits the Oversold zone.
2. MACD (Moving Average Convergence/Divergence)
The MACD tracks the relationship between two moving averages, revealing the direction and strength of the trend. What does it do? Measures the trend and its momentum.
What does it do? Measures the trend and its momentum.
Key Points:
Bullish Crossover: The MACD line crosses above the Signal Line. It is a signal that positive momentum is increasing (possible buy).
Bearish Crossover: The MACD line crosses below the Signal Line. It is a signal that negative momentum is increasing (possible sell).
Bearish Crossover: The MACD line crosses below the Signal Line. It is a signal that negative momentum is increasing (possible sell).
Quick Use: The line crossover alerts you to possible changes in market direction.
3. Moving Averages (MA)
Moving Averages (like the 50 or 200 EMA) smooth out the price to show the true market trend, acting as dynamic supports and resistances.
What does it do? Defines the trend and finds support/resistance zones.
Key Points:
Bullish Trend: The price remains above the MA.
Bearish Trend: The price remains below the MA.
Support/Resistance: The price often bounces off these lines or breaks through them strongly to indicate a trend change. Quick Use: If the price bounces off the 50 MA, the trend remains strong.
Quick Use: If the price bounces off the 50 MA, the trend remains strong.
🛠️ Summary for Success
Do not use these indicators separately. Confirm an RSI (momentum) signal with a MACD (direction) crossover and check that the price follows the trend set by the Moving Averages (trend).
➡️ Comment below! What is the indicator that helped you the most when you started trading? We want to hear your experience!
