What is a moving average?

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2020-02-08 17:18

The moving average is a technical indicator used to show the average closing price of the market over a specified timeframe with 20 day, 50 day and 200 day being the most popular timeframes. Traders often use a moving average to identify potential support or resistance along with the crossing of moving averages as a signal of an impending price movement.

Moving averages are typically provided in either a simple moving average (SMA) or an exponential moving average (EMA). The difference between SMA & EMA is that the simple moving average does not weight the averages where as the exponential moving average weights the more recent days inputs providing greater influence by recent price movements then equally across the entire timeframe being averaged.

It's not uncommon crypto traders use the moving average in conjunction to trendlines, market depth and order flow to make assessments on when to enter or exit a position. This indicator works great with trading bitcoin or trading altcoins such as Litecoin, Ethereum, XRP, Monero, ChainLink and any other digital asset being traded on crypto exchanges today.

Below is an example of some moving average for Bticoin, notice how the 50day moving average is currently providing solid support.  Any meaningful break of the 200day moving average or cross of the 50 day and 200 day SMA is considered a strong signal for this indicator.  https://www.tradingview.com/x/dJ4aW33E

Bitcoin 50 day and 200 day SMA

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