A moving average is one of the many terms that is associated with technical analysis. When it comes to technical analysis, moving average is one of the technical indicators that is commonly used by a lot of traders and investors to smooth out the price actions and noise on the price chart and to better understand the direction of the market. A moving average is basically the representation of the average closing prices of any cryptocurrency over a specified time period on a chart.
A moving average indicator compares the latest prices of any cryptocurrency asset with the average price of that cryptocurrency asset during a specific time period. A lot of traders make use of the moving average indicator to identify trends in the market and also to reveal hidden patterns on the chart. At the moment, there are three common moving averages that can be used on any price chart such as simple moving average (SMA), exponential moving average (EMA) and weighted moving average (WMA). However, the two commonly used moving averages are the SMA and the EMA indicators.
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Moving Average Indicator on the BNB/USDT Chart on tradingview
Identifying Entry and Exit Points Using Moving Average
Looking at the BNB/USDT chart, we can see the buy signal from the SMA and the EMA moving averages. Using the 50 EMA and the 200 SMA, the price is well above the 200 SMA line which is a strong indication that the market is in an uptrend. Also the 50 EMA line crossed above the 200 SMA line which is a good indication that the price is about to reverse and move into an uptrend direction. This shows that the longer term price movement is bullish. The price rose above the 50 EMA line and fell back to the 50 EMA line which was an indication that the EMA line has become the dynamic support level for the price. For me, I placed a buy when the price retraced after a big green candle was formed.
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Screenshot of BNB/USDT Chart on tradingview
On the BNB/USDT chart, we can see the sell signal from the SMA and the EMA. Using the 50 EMA and the 200 SMA, the price is well below the 200 SMA line and below the 50 EMA line which is a strong indication that the market is in a downtrend. Also the 50 EMA line crossed below the 200 SMA line which is a good indication that the price is about to reverse and move into a downtrend direction.
This shows that in the longer period price movement is bearish. The price fell below the 50 EMA line which became the resistance level. However, the price broke above the 50 EMA resistance level but was not able to break above the 200 SMA line. This was a good indication that the market was still bearish. The price fall back down and broke below the 50 EMA line. I placed a sell after the large red candle was formed below the 50 EMA line.
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Screenshot of BNB/USDT Chart on tradingview
