If prices rise, we buy assets; if prices fall, we sell.

  • A decrease in volume may signal reversal.
  • A decrease in volume during a breakdown may indicate false signals, while a growing volume, on the contrary, confirms the trend.
  • Moving average

    It’s another popular indicator, and it’s actually the most classic tool on the market. The Moving average is easy to interpret, that is why it stays one of the traders’ favorite indicator over time.

    The indicator analyzes the average (just like the name) price for a set time interval. The MA chart is overlaid the chart of current price movement, which gives a relative view of the price trend. If the current cryptocurrency price stays above the MA during a long time, we may assume its growth.

    Best indicators for crypto trading

    Markets are constantly changing and shifting environments throughout the timeframes, because of that you should always be mindful of what is going on before you start to get affected by technical indicators.

    Cumulative Volume Delta – CVD

    At the first sight, the cumulative volume delta looks similar to any other oscillator like previously mentioned RSI, or Macd, Stochastics, etc.

    But compared to these classic oscillators, cumulative volume delta represent something completely different.

    To understand it properly, you need a little deeper understanding of orderflow in trading, which I previously covered in this article.

    A delta represents finalized executions at the bid and the offer.

    There are several ways how to incorporate Delta in your trading with Cumulative Volume Delta (CVD) being the easiest one for beginning traders.

    Best indicators for crypto tradingview

    The faster an indicator reacts, the less likely it is giving us a wrong signal.

    With that in mind, our besy crypto indicator of choice for trading the 1 Hour Ethereum chart is the MACD. Let’s take a look at a trade:

    Here, after the MACD showed me a crossover (the blue line crossed over the orange line) which indicates growing momentum, I entered a trade at the 239.50 mark.

    For the moment this looks like it will be a fairly standard trade, however, the interesting part happens at the 241.80 mark where I nearly panic exited the position. This was due to seeing that big red candlestick.

    This is where sticking to the fundamentals of your day trading strategy is crucial, because we can clearly see the MACD is not showing another crossover (the big green arrow).

    Best indicators for crypto trading reddit

    Red candle signal a decrease in volume, green ones indicate its growth.

    Analyzing volume of trades along with the background of the price movement chart, it’s possible to confirm the strength or identify the weakness of the trend and predict a price reversal. If prices go up and the volume of trades increases, we state a bullish trend.


    An increase in trading volume in the event of a decrease in prices indicates a bearish trend. Remember a few rules:

    1. Volume has a tendency to jump wildly, which at times could distort real picture.
    2. The higher volume of completed trades, the bigger rate dynamics.
    3. A confident trend is confirmed by unidirectional increase in volume and price.

    Best indicators for crypto trading bot

    Bollinger Bands

    The Bollinger Bands is an indicator that is used to determine the movement of an asset’s price within a band by allowing the width of the upper and lower bands to move together with price fluctuation. If you see the price of an asset move out of the upper and lower bands, then a price reversal may be imminent.


    It can be interpreted as follows:

    • Middle Band – Simple Moving Average over 20 days (SMA)
    • Upper Band – SMA over 20 days + (Standard deviation of price over 20 days x 2)
    • Lower Band – SMA over 20 days – (Standard deviation of price over 20 days x 2)

    OBV

    OBV is an indicator that uses the volume flow of an asset to predict price changes and to determine how strong signals are to buy or sell an asset.

    Best indicators for crypto trading binance

    When this happens, the average price level data combines with trend information.

    The %b indicator and the Bollinger bands also act as an oscillator and as a dynamic resistance and support that change with the market’s behavior.When volatility increases, the upper, lower, and middle bands widens. When the market settles, the bands thin.

    How to Use Bollinger Bands in Cryptocurrency Trading?

    One of the best indicators for cryptocurrency trading are Bollinger Bands.

    There are two strategies that you can use. The first one is the Bollinger Squeeze and the second is the Bollinger Band: Support and Resistance.

    • Bollinger Squeeze

    A Bollinger squeeze occurs when the lower and upper bands tighten. They squeeze the centerline making it escape the bands.
    This indicates that a significant movement will occur.

    Best indicators for cryptocurrency trading

    It consists of 3 components:

    • MACD = 26-period EMA – 12-period EMA
    • Signal Line = A 9-period EMA of the MACD.
    • MACD Histogram = MACD – Signal Line

    MACD is dependent on moving averages, what makes it lagging. But it is still accurate and reliable. Besides, MACD supplies enough flexibility because it can be applied to price charts of different time frames.

    Positive MACD indicates an uptrend.
    Rushing to an up signal line means a good time to buy, called a bullish cross. Negative MACD indicates downtrend. When MACD crosses the below signal line, it is a good time to sell, called bearish crossover.

    RSI

    Relative Strength Index shows the market overbought or oversold.
    It indicates the weakness or strength of a cryptocurrency through its price previous changes.

    Best indicator for bitcoin trading

    And although indicators I will try to show you more sophisticated and unknown indicators than classic moving averages, I wouldn’t throw these MAs away.

    There is no right or wrong in trading and there can be days where experienced DOM traders can be outperformed by traders who use simple moving average crossover in their trading.

    On the other hand, these more basic technical indicators tend to give more false or not working signals and they are very dependant on the trading environments the market is currently in.

    In trending markets, RSI can be overbought or oversold for days or weeks before markets reverse, but it can work great in a bracketing market where you simply fade and extremes of a range.

    As you can see RSI on Bitcoin got overbought on the 19th of October 2020.

    At that time price was around $12,000.

    Best indicators for crypto day trading

    The biggest profit in the crypto markets, such as Ethereum trading, is made by day trading. This is because Cryptocurrency price movements happen in flashes.

    It only takes a matter of hours for trends can change completely. Here we will look at the best crypto indicators for a 1 hour trading strategy.

    The idea is to enable you to capitalize on the smaller market movements.

    There is less chance to be burnt making shorter lasting trades, specifically, day trading. You may have even labelled off crypto trading as being a game of chance, however, there’s much more to it.

    One way to ensure results is to use the best crypto signals for day trading. If you need help buying crypto, then check out our guide on buying Ethereum with a bank card instantly.

    Best Crypto Indicators when day trading

    With day trading, you can take advantage of all the smaller price movements.

    Best technical indicators for crypto trading

    So, this is the reason why traders, especially new ones should trust the most popular indicators.

    So, the most popular crypto trading indicators are:

    • RSI
    • MACD
    • Volumes
    • Bollinger Bands
    • Fibonnaci Retracement levels
    • Trend lines
    • Moving Averages

    RSI (Relative Strength Index)

    RSI or relative strength index is an oscillator that shows when price is overbought or oversold. It shows price momentum. Index goes from 0 to 100. 70 and above usually means that commodity is overbought, 30 and below means that commodity is oversold.

    You can calculate RSI meaning with following two step formula:

    Most commonly used RSI is 14 or 21 periods.

    Best indicator strategy for crypto trading

    Cryptocurrency trading is actually quite easy and lucrative if you just stick to the fundamentals.

    Cryptocurrency trading made easy

    Technical analysis is one approach to evaluate the rise and fall of cryptocurrencies. By utilizing the best indicators to know the rate of digital currencies, you can make educated predictions and engage in wiser trades.

    This article features the best staple technical analysis tool and the top momentum indicators.
    These tools are used for making predictions and knowing the present market sentiment and market trades for cryptocurrencies.

    RSI indicator

    What is RSI? The Relative Strength Index (RSI) is a momentum indicator and technical trading indicator. It is the most well-known technical analysis tool because of its clear and simple outputs.

    This line from the calculation is the MACD line and the other 9 period EMA is signal line.

    Traders use MACD as a buy signal when these lines cross above and as a sell signal when lines cross below. MACD also helps traders to determine if the market is overbought or oversold.

    How to use MACD for crypto trading?

    Traders use MACD indicators along with RSI in crypto trading.

    This combination gives more certain signals in overbought and oversold zones. To find reversal points traders use trend lines and volume as well.

    Example of usage MACD in crypto trading:

    MACD with other indicators:

    Apply theory into practice.

    Try Stormgain for crypto trading! Sign up bonuses, all trading indicators, user friendly interface.

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