Long-term moving averages for Bitcoin

2019년 12월 6일

Chart
In this chart, we display how long-term moving averages can play a very important role in your strategy. Even though you are not a long term investor, long-term moving averages or long-term analysis are crucial to know where the market is heading to.

In this chart, we can see how the moving average filters out the noise of the price and shows where it is likely to initiate a new trend. Generally, slow-moving averages that multiply by 3 the periods of the last ones are good to smooth price movements and pinpoint the direction of the ongoing trend.

What is interesting is that after a crossover, the moving average usually doesn’t make another one after several months have passed. This suggests that the price can head to the same direction for quite a long time. This insight is key to the development of your trading strategy.

Designing your automated strategy
The indicator selected in the chart is the Weighted Moving Average (WMA). This moving average is designed to react faster to price movements than others like SMAs or EMAs. As you can see in the chart, this long-term and fast moving average has pinpointed very well the beginning of new trends. By selecting this in your strategy, the hopper will be able to open positions when a trend reverses. Or simply, by combining it with other indicators, it could filter out negative trades.