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How to use technical indicators for cryptocurrency swing trade
Swing Trading is a popular investment strategy that includes the use of technical indicators and diagram patterns to make good decisions on buying and selling cryptocurrencies. Although technical analysis can be used as an independent indicator, it is essential to understand how to combine with other tools, such as cryptocurrency-specific indicators, to improve trading performance.
What are the technical indicators?
Technical indicators are numeric values that show the results of various diagram patterns and trends on a financial instrument such as cryptocurrencies. They help investors identify potential purchase or sales signals, price movements, and make sound investment decisions. The general technical indicators used in the cryptocurrency trade are as follows:
- Averages of movement (today): The average price of security over a given period.
- Relative strength index (RSI): measures the speed and change of price movements to determine over -purchased or excessive conditions.
- Bollinger bands: A volatility -based index depicts two moving averages with added spray.
- MACD (moving average convergence divergence): closes the difference between the two moving averages, indicating the relationship between reception and selling pressure.
How to use technical indicators for cryptocurrency swing trade
Follow these steps for effective use of technical indicators in the cryptocurrency for swing trade:
- Choose a cryptocurrency : Choose a special cryptocurrency that is interested in commerce such as bitcoin (BTC), ETHEREUM (ETH) or Litecoin (LTC).
- Set the chart : Create a chart with the following settings:
* Time frame: 1 or 4 hour chart
* Candle holder type: closure, open, high, low
* Mikratators: Select preferred indicators for each period and the level of details.
- Define trend samples : Find trend lines such as:
* Diagram patterns (such as head-to-head, inverse head-resorts)
* Line breaks or divergence
* Crossing or crossing the moving averages
- Determine over -purchased/overloaded conditions : Use your indicators to identify safety (above 80) or overloaded (below 20).
- Set the Stop-Loss and Take Profit Level : Determine Stop-Loss and Take Profit Based on your risk management strategy.
- Set the position size : Set the size of the position based on market conditions to take into account the potential price movements.
Example: Using RSI as a SWING TRAINING RAIR
The relative strength index (RSI) is a popular technical indicator used to measure over -purchased or excessive conditions in cryptocurrencies such as BTC and ETH. Here’s an example:
| Time frame RSI (14) | RSI (28) |
| — — —
| BTC (1 hour diagram) 30 70
| BTC (4 hour diagram) 40 60
In this example, the RSI values indicate that BTC 70 is excessive and over 40. This suggests that you sell or wait for a break above $ 6,000 before your purchase.
More tips and considerations
- Keep up -to -date
: Keep up -to -date technical indicators with market changes.
- Avoid excessive emphasis on indicators : not too much for technical indicators; They are just a tool in the investor’s asset.
- Focus on the quantity of trade
: monitor the trading quantity to assess demand and possible levels of support or resistance.
- Use multiple indicators : Mix different indicators such as moving averages and Bollinger bands for a more comprehensive analysis.
Conclusion
Technical indicators can be a valuable tool for cryptocurrencies such as Bitcoin and Ethereum Swing. If you combine them with other tools, such as diagram patterns and market emotional analysis, you can develop a more informed strategy to produce profitable trade.