Best 8 Bitcoin Indicators for Cryptocurrency Trading

Learn more about how to trade with Fibonacci Retracement in crypto in the article by the GoodCrypto team. To improve your trading skills and upgrade your knowledge about this indicator, read our full article about the Relative Strength Index (RSI) Indicator for Crypto Trading. Both the Aroon Lines move parallel to each other indicating the price consolidation of Bitcoin in the given timeframe. Now, the A/D line is drawn at — Previous A/D Line + Current Period’s MFC.

This could be interpreted as a sell signal when many others would assume the opposite. Momentum indicators usually perform best during bull markets and aren’t typically as useful when measuring sideways price action. Momentum indicators are very similar to trend indicators and the terms are sometimes used interchangeably.

When the price is above the MA, it is generally considered to be in an uptrend. Conversely, when the price is below the MA, it is usually in a downtrend. Explore the advanced trading tools and features offered by OKX, the leading cryptocurrency exchange. Despite its advantages, it’s essential to acknowledge that the Ichimoku Cloud may appear complex and daunting to some traders, particularly those new to technical analysis. Its intricate nature can be overwhelming, requiring a dedicated effort to understand its components thoroughly. To get the best of your strategy, you must develop ideas and best practices based on your research to make an informed decision.

  • Indicators provide a reliable way for traders to analyze market trends and make informed decisions based on data and statistics.
  • But, TA experts assume that regardless of the time frame, price movements always are part of a trend.
  • It is recommended to use other compatible indicators to determine the most accurate buying opportunity.
  • Unlike many other cryptos, there is no limit on the number of Dogecoins that can be created, which leaves the currency susceptible to devaluation as supply increases.
  • The ratio of the market capitalization of Bitcoin to the total market capitalization of Bitcoin is known as Bitcoin dominance.

Also, when the RSI goes below the 70% level, this can be interpreted as a bearish signal; on the other hand, if it rises above 30%, this can be seen as a bullish sign. The MACD and the RSI are valuable tools with which technical traders can analyze an asset’s price charts, looking for patterns indicating when to buy or sell the crypto. It helps calculate the direction, length, and strength of momentum. Since it relies on moving averages, it falls under the trend-following, lagging indicators. Standard Bollinger Band formulas set the centerline as a 20-day simple moving average (SMA). As for the top and bottom bands, these are calculated based on market volatility.

Do professional traders use indicators?

This makes it a perfect tool for a day trader to analyse the market to get a more reliable and accurate trend. The adept use of prominent trading indicators can signal a digital asset’s likely short and longer-term momentum. Moreover, crypto indicators can be used to identify shifts in momentum such as a possible reversal point.

Cryptocurrency is treated as a capital asset, like stocks, rather than cash. That means if you sell cryptocurrency at guía para el desarrollo de software de outsourcing con éxito a profit, you’ll have to pay capital gains taxes. This is the case even if you use your crypto to pay for a purchase.

If the total market cap of the whole market is growing and Bitcoin dominance is going down, an “alt season” (the bull market for altcoins) is likely approaching. The MACD divergence refers to the two underlying moving averages moving apart, while the convergence relates to the two underlying moving averages coming towards each other. When you identify these points, you can select the Fibonacci retracement tool in your trading software and connect a swing low to swing high. It’s easy to identify when an asset will cool off even for a short period, and this is visible if the chart is in the overbought territory. Without further delay, let’s delve into our comprehensive ranking of the 8 Best Bitcoin indicators for crypto traders. RSI stands for “Relative Strength Index.” It is simply an indicator that measured how overbought and oversold a coin is.

The MACD is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. The 9-day EMA of the MACD, which is called the “signal line,” is then plotted on top of the MACD. OKX also has a detailed trading fees schedule that applies to users based on their trading volumes and OKB holdings. Let us now consider the two common categories of indicators and their functionalities.

Now, let’s take a look at how the MACD indicator can be applied to your strategy.

A smart way to arrange your crypto trading indicators is to combine the ones that belong to different categories. For instance, a trend indicator like a moving average will combine powerfully well with a momentum indicator like RSI. This is because while the moving average presents the direction of the trend, the RSI would display the trend’s strength.

Understand the types of crypto indicators

If an asset is oversold according to the RSI, that means that it is trading at the upper third of its price range. Overall, RSI measures how strong up and down movements are and is a pretty clear indicator. However, there is no guarantee that assets will actually bounce once RSI hits 30 or 70. Generally, RSI signals are more potent when the market trades in a range without significant up or down movements.


Whether you are a day trader, swing trader, or long term investor, moving averages can provide significant value to you. They can act as support or resistance, and allow you to quickly identify limefx broker review a coin’s trend. They are a crucial component of successful strategies based off technical analysis. This is why the most successful crypto traders and investors use technical indicators.

What Are Cryptocurrencies?

The volume of cryptocurrencies is the primary tip-off used for technical analysis. The OBV presumes a blend of techniques for predicting a particular asset’s future price or exchange rate – whether we talk about commodities, securities, or cryptocurrencies. It should be noted that the number of periods can be used to calculate this indicator, but it is usually 20. Depending on the strength of price movements, these curves bend and widen—higher volatility results in a more significant gap between the curves.

This indicator can also be used to detect divergence signals, similar to what we explained with the MACD indicator. Below 30, the market is considered oversold, while above 70, it is considered overbought. However, during forex broker review sustained trends, the relative strength index can remain in either the overbought or oversold region for long periods. Now that you know all about the best crypto trading indicators, it’s time for some practice!

How To Report Crypto on Taxes

Shorter timeframes (for day traders) will require faster moving averages like MA 9, while longer time frames (for swing traders) will require slower moving averages like MA 200. ADX is a trend-based indicator, hence, using it alone is a risky proposition. In conjunction with price movement indicators, like moving averages or support and resistance, ADX can make you a better trend trader. Trend-following indicators are designed to recognize and track the direction of a trend within the volatile cryptocurrency market. They offer insights on whether a crypto asset’s price is rising or falling over specific time frames, guiding traders’ decisions to buy or sell. Fibonacci Retracement provides a simple and effective way for traders to identify potential market support and resistance levels.

The best indicators for cryptocurrency trading help make sense of price action, and help you predict where the price will likely head in the future. Indicators are helpful in both long and short term price analysis. They signal the events that are bound to happen in the trading market.

Therefore, we encourage you to consider subscribing to Bitcoin or other crypto trading signals directly from professional traders. This way, you can fully capitalize on the wealth of knowledge and experience that top traders bring to the table. It is a great indicator of the long term trend of a cryptocurrency coin. You can see how BNB breaking above its 200 DMA ignited an over 400% move back in early February.

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