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BTC ready for a trend change at the long term average

04/30/2019 17:49

A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out the noise from random short-term price fluctuations. It is a trend-following, or lagging, indicator because it is based on past prices.
 
The two basic and commonly used moving averages are the simple moving average (SMA), which is the simple average of a security over a defined number of time periods, and the exponential moving average (EMA), which gives greater weight to more recent prices. The most common applications of moving averages are to identify the trend direction, and to determine support and resistance levels. 
 
I usually look at 200-day exponential moving average (to represent one year's trading) or in cryptocurrencies case a 365-day (52-week) exponential average, year-long average to identify trend direction. Price trading above the long-term average is usually a confirmation of an uptrend. Price that remains below the long-term average suggests lower prices and as a result continuation of the downtrend.
 
Since 2012, Bitcoin price chart respected its long-term moving average. While not a perfect trading tool, the long-term moving average helped traders/investors to remain on the right side of the market. In the second half of 2018, BTC/USD price fell below its year-long average around 6,500 levels. In the last quarter of 2018, a sharp drop followed. 
 
After a long-time BTC/USD price is trying to recover above its long-term average at 5,250 levels. Last one month's price action around the average indicates that the market has acknowledged the level as a technical resistance. A breach above the long-term average and stability above it can change the medium/long-term trend from down to up.   
 
 
 

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