The Capital
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The Capital

The Moving Averages Strategy That You Have To Pay Attention

By Rubika Ventures on Altcoin Academy

Overview

  • Introduction
  • Moving averages are indicators
  • Next Story

Introduction

Let us tell you something shocking. It’s true, technical analysis within the cryptocurrency market fails. But why? The answer is simple: excessive volatility and high trading margin in terms of volume. It is a market that never closes its doors.

Bitcoin Daily Chart — No representative Advisement

For some people, the above can be positive. For others, it can be frustrating. Therefore, let us show you which indicators are really effective in generating optimal profits.

For this case, we will show you the moving averages that can make a great difference in your trade on the cryptocurrency market. And for the purposes of this study, we will take Bitcoin as a reference.

Moving Averages are Indicators

Source: https://uxdesign.cc

It is a good thing to remember that the moving averages are indicators and as such, they will help us to deduce the supports and resistances; and the opening or maximum and the minimum or closing of a period of time. So, indicators such as: force and price derivation; impulse, trend, volatility and among others, can be studied as say (Murphy, 1999 & Lemmos, 2015).

Bitcoin Daily Chart — EMAs vs MAs

And also for better attention, we know that there are two types of moving averages: (a) simple or arithmetic moving averages (MA) & (b) exponential moving averages (EMA). The truth is that we can get to confusion about which of the types to use.

But (Murphy, 1999 & Lemmos, 2015), they explain that basically (a) the trend follows, without taking into account the prediction of future price direction and yes, the current direction with some delay. So they are based on showing past prices. In spite of them, with (b) we managed to soften the price and filter out the noise.

In the case of (b), they help to reduce the delay in relation to prices, which allows more weight to be applied to the most recent prices.

But Then, Which One of the Two Types Should we Use?

Source: freepik.es

(Murphy, 1999 & Lemos, 2015) warn us that all will depend on the objectives, the analytical style of the time and the trading strategy to be executed. But in terms of price prediction and subsequent movement that the asset can show, (b) can be much more useful than (a).

Next Lesson Story

Don’t worry, don’t cry. This may be the end of the lesson story. But in the next one, we will show you a Rubika strategy that can help you generate good income with your trades.

Therefore, with the concepts shown so far, the theory that the technical analysis based on indicators can be significant for the cryptocurrency market is validated. And we say significant due to some failures. Failures in terms of short and medium-term prediction.

Here then was a brief summary of the importance and concept of moving averages to identify supports and resistances and a certain prediction of prices over time.

So, see you in the next story lesson. 😉

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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