Highlights ①. Gate's "Basic Futures Courses" course introduces various methods of technical analysis that are commonly employed in futures trading. These courses aim to help traders establish a comprehensive framework for technical analysis. Covered topics include the basics of Candlestick charts, technical patterns, moving averages, trend lines, and the application of technical indicators. ②. In Course 20 of the "Application of a Single Moving Average ", we introduce you to how to use different moving averages to do market analysis in actual trading.
1. 5-Day Moving Average The 5-day moving average is a short-term moving average that reflects the short-term trend of a currency's price. In practical trading, the 5-day moving average is often referred to as the 'attack line,' with the angle of the line representing the strength of the short-term trend.
The 5-day moving average has the following technical implications in practical trading: ①. In a medium to long-term uptrend, when the currency price breaks above the 5-day moving average, it signals the end of the mid-to-short-term consolidation within the uptrend. This is an indication to buy, advising traders to open long positions. ②. During an uptrend, if the currency price continues to rise along a steep-angled 5-day moving average, it indicates a strong bullish wave in the market, suggesting that traders should confidently maintain their positions. ③. If the token initially increases along a steep-angled 5-day moving average and then falls below it, this is a signal for short-term traders to close their positions and exit. It also serves as an alert for medium to long-term traders to reduce their positions. ④. For extremely weak coins that have been consistently falling along a steep-angled downward 5-day moving average, a rebound and subsequent rise above this moving average presents an opportunity for short-term traders to enter. However, strict position control is required, and a fast-in, fast-out strategy is recommended to maximize profits. The initial exit point, or the stop-loss position, should be set for when the currency price falls below the 5-day moving average again.
Notes: When using the 5-day moving average, traders should consider the following two points: ①. The 5-day moving average must have a sharp angle, whether it is moving upward or downward. The currency price should change at a dramatic pace. A stable 5-day moving average that changes slowly or even flattens indicates little technical significance in practical trading. ②. The currency price must be following a very obvious medium to long-term trend and should move in alignment with the 5-day moving average.
2. 30-Day Moving Average The 30-day moving average reflects the medium-term trend, with a much smaller fluctuation range and frequency than the 5-day moving average, thus exhibiting stronger stability. In practical trading, the 30-day moving average is of significant reference value for swing traders. Its technical meanings can be interpreted as follows: ①. In an uptrend, when the price rises to surpass the rising 30-day moving average, it indicates the potential end of mid-term consolidation within the uptrend, suggesting a good buying opportunity. Traders should seize opportunities to enter the market in such cases. ②. During an uptrend, if the 30-day moving average continues to rise and the currency price increases along with it, and even if the price falls, it typically pulls back before falling below the 30-day moving average. This pattern signals traders to maintain their positions. ③. In an uptrend, if a currency previously rising along the 30-day moving average starts to fall below it, this signals a time for short-term traders to close positions and exit, and for medium to long-term traders to significantly reduce their positions. If the 30-day moving average also turns downward, short-term traders should decisively take short positions to avoid possible mid-term consolidations. Medium to long-term traders should also consider closing their positions to exit. ④. In a downtrend, when weak currencies that previously fell along the 30-day moving average rebound and break above it, this suggests an opportunity to enter and open long positions.
3. 60-Day Moving Average The 60-day moving average represents the average closing price over the past three months, reflecting the approximate average cost during this period. The direction and angle of the 60-day moving average indicate the direction and strength of the medium to long-term trend. This moving average is particularly relevant for indicating medium-term trend directions. In practical trading, it has the following implications: ①. The 60-day moving average is key in identifying medium to long-term trends in the crypto market. Pairing daily K-line charts with the 60-day moving average creates an effective combination, offering a balance between efficiency, stability, sensitivity, and reliability. ②. For non-professional traders who cannot monitor the market around the clock, the 60-day moving average provides a simpler and more straightforward method for determining entry and exit points compared to interpreting bullish or bearish alignments. The specific guidelines are:
a. Entry is suggested when the currency price breaks above and continues to run above the 60-day moving average. b. Traders should consider reducing positions when the currency price begins to level off after a rise along the 60-day moving average and close all positions when it falls below this moving average.
Notes: ①. The 60-day moving average strikes a good balance between accuracy, stability, and sensitivity. Although the 60-day moving average is only regarded as a medium-term indicator, the trend it suggests often implies the possible movement direction of the market in the long run. ②. In a long-lasting one-sided market, a significant trading signal can emerge when the coins break above or below the 60-day moving average, which is followed by a change in the direction or angle of the 60-day moving average.
4. 120-Day Moving Average The 120-day moving average is a long-term indicator, representing the average cost of holders over the past six months. When the currency price is above this moving average, it suggests that long-term traders are optimistic about the currency, typically indicating solid support behind its strong performance. The 120-day moving average holds the following technical significances in trading: ①. It reflects the long-term trend of the cryptocurrency market. As a long-term moving average, its direction indicates the long-term trend direction of the currency. ②. The 120-day moving average often acts as a crucial level of resistance and support. ③. When various moving averages converge around the 120-day moving average, a breakthrough in the currency price through this convergence zone signals a bullish outlook for the currency. This situation represents a favorable buying opportunity.
5. Summary
This session introduces the practical applications of short-term, medium-term, and long-term moving averages, specifically the MA5, MA30, MA60, and MA120. Among these, special attention should be given to MA60, which carries important technical meanings in trading. Breakouts of MA60 often mark a shifting point for medium to long-term market trends.
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Disclaimer This article is for informational purposes only and does not constitute investment advice. Gate is not responsible for any investment decisions you make. Content related to technical analysis, market assessments, trading skills, and traders' insights should not be considered a basis for investment. Investing carries potential risks and uncertainties. This article offers no guarantees or assurances of returns on any type of investment.
