What is a Moving Average?
Markets open and close, so a moving average represents the average closing price of a coin over a specific period of time that you choose, which makes it convenient to use for both short-term and long-term trading. So you can calculate a moving average for 5 minutes, 100 hours or 200 days. The purpose of the moving average is to smooth out all the inconsistencies in the trends in order to give you a more accurate estimate of how the price is moving.
How to use Moving Average on Coinigy
I am going to show you how to set up and use moving averages on Coinigy. After you’ve signed up for an account, on the left hand side of the screen you have to choose the exchange platform that you want to look at and the exchange pair that you want to analyse. In this example, I have chosen Binance as the platform and the pair SUB / ETH (Substratum / Ethereum) and I have created three Moving Average trends for 50 days, 100 days and 200 days respectively.
TECHNICAL ANALYSIS: How to set up Moving Averages on Coinigy
Posted by Doctor Crypto on Tuesday, 28 November 2017
So now that we have the Moving Average lines for 50 days, 100 days and 200 days, we can compare the price at any given time to these 3 trends. Generally speaking, we want the price to always be higher than the moving average and we wouldn’t want it to go below the moving average as this means that it was sold and there was a decrease in price.
Prices much higher than the MA trend indicate that there is confidence in the market (bullish market), whereas prices lower than the MA trend indicate that there is fear in the market (bearish market). These MA trend lines could be used to determine what the support lines are, and these are usually met when the price drops below the MA trend line and this indicates a potentially good time to invest because this is when people oversell.
It is very important to bear in mind that this is a SUB / ETH graph, not a SUB / USD graph. This means that even if the value of SUB compared to ETH stayed the same at 2 different points in time, the actual value of SUB in dollars could be different because of the potential difference in the USD price of ETH.