One of the very common and frequently asked questions to the investors, especially beginners in the crypto market is what price indicators do I need to prefer and which among them are expedient while I am trading on bitcoin or Altcoins?
As technical price indicators play a major role in intraday trading, it becomes essential for newbies to understand these indicators to avoid risky investments. As they will help you to know the best entry and exit time frames.
Are you still skeptical about what price indicators bring you the best results out? No worries!
The following guide gives you detailed insights into key price indicators that every crypto trader should know. Let’s get started!
- Relative Strength Index:
- Bollinger Bands.
- Fibonacci Extension.
1. Relative Strength Index (RSI):
This is one of the most popular indicators in the crypto market developed by J. Welles Wilder. The RSI basically evaluates how well a crypto asset is performing against itself by measuring the price value of the up days versus the down days.
According to the developer, an RSI price value falling within the range of 0 to 30 is considered oversold. With this chart, you as an investor get a hint that an oversold currency pair is an indication that the falling market price is likely to reverse soon, i.e a bullish signal, and indicating this as the right time to buy crypto assets for you.
On the other hand, an RSI price value between 70-100 state of the scale is considered as being overbought, which indicates that that currency pair is overbought! This further gives you a clue that the resistance level of the asset has been reached and bears may overtake the market. This would be interpreted as an opportunity to sell your crypto asset.
2. Moving Average Convergence Divergence (MACD):
The Moving Average Convergence Divergence (MACD) is basically a momentum-based technical indicator. As the name implies, this indicator depends on the Moving average for analyzing the price moves of a crypto asset.
Histogram plays a crucial role in understanding the strength of the trend via the length and height of candles in the chart.
Convergence is where two lines intersect each other, this indicates a bearish trend. divergence is where two lines are getting apart from each other indicating a bullish trend.
Let me simplify and explain to you with the help of a chart:
MACD performs based on the difference between a 12-day and 26-day period Exponential Moving Averages (EMAs) (i.e executed by subtracting the 26-day EMA from the 12-day EMA.)
Blueline on the chart indicates a MACD line and Redline is the signal line.
The result of the difference indicates the MACD line. A 9 day EMA of MACD known as the signal line is then plotted on the top of the MACD line.
Whenever the MACD line spikes above the signal line it implies a Buy signal i.e a bullish sign and when MACD drops below the signal line it hints to sell your crypto assets.
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3. Bollinger Bands:
Understanding the price trends in the crypto market is important to achieve higher gains. Bollinger Bands simplifies this job.
This was developed by John Bollinger, bands are utilized to indicate possible breakouts and the time frames to enter or exit a trade. These bands are plotted in and around the price structure consisting of a middle band (indicates a moving average).
The upper band indicates the price when it is relatively high, and the lower band implies when the price is relatively low.
4. Fibonacci Retracement:
Fibonacci retracement is what most people refer to for technical analysis. It gives effective results in deciding entry and exit states in a market, at the same time it can also be very risky if you fail to use it right.
This method uses a set of numbers called Fibonacci numbers to indicate support and resistance levels in the value of a cryptocurrency.
Each number in the series implies the sum of the two numbers before it. For instance: 0, 1, 1, 2, 3, 5, 5, 8, 13 and so on.
Let’s now have a look at its application in technical analysis in crypto trading. The retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%.
In the below chart you can see, the retracement was plotted from point A (low) to point B (high). The Fibonacci numbers are set up in the middle starting from 23.6% at the top down to 78.60% at the bottom.
The price of ETH spiked from A to B and then flipped to the 50% mark. If ETH is in a clear bull trend, it indicates to buy Ethereum, because the bounce occurred at 50% which some investors say is very productive even though it is not a Fibonacci number.
All the indicators mentioned above in the article bring you the best results. But wait! Indicators show past data of trading in the graph. It is difficult to make the best decision based on a single indicator, one needs to understand when to use a particular indicator.
In short, all indicators are mathematical equations based on the data of the chart and they don’t predict anything because they can’t.
ADA Market Prediction
Here is what some eminent websites view on Cardano price prediction, which will give us a fairer idea
Smartereum author Adam Web believes that the future of ADA is bright where he claimed that the one-year prediction for the ADA token is around $2.50, with the potential to reach roughly $10 in 5 years.
According to WalletInvestor’s algorithm-based forecast, the ADA prediction is revised from Cardano $2.175 to $3.319 in one year. Their estimates say that investment in ADA has a long-term earning potential of +116.21% in one year.
According to TradingBeasts, Cardano could reach $1.33 at the end of 2021 with a change of -8.8%. And, also ADA would be trading at $2.769 by the end of 2024.
4) coin switch
This platform has provided an extremely strong Cardano price forecast of $2 in the future. In 5 years, they expect ADA to reach over $3.
4) Cardano Price Prediction
If ADA focuses on building the user base turning it from developing to developed network, as well as its protocol, it may gain new investors, raising the year-end’s figures to $3.114. Also, investors with FOMO will start investing in ADA since it is trending post-Elon Musk stepping back from Bitcoin.
This can further extend the bulls to rally near $5.