Best indicator for cryptocurrency trading: the aim and rules of daily use

To analyze cryptocurrency rates and to choose the best indicator for cryptocurrency trading, algorithms are used that have long been implemented in indicators of technical analysis and have already confirmed their effectiveness in reliable foreign exchange and stock markets that don’t violate privacy policy. Their versatility is due to the use of mathematical methods for calculating readings, where only the price of the asset understudy or information on trading volumes act as initial data. Therefore, any indicator will work with cryptocurrency market quotes, where the same pricing principles apply as on classic trading platforms.

The role and function of indicators in the crypto market

But many features distinguish the altcoin market from classic investment instruments. First of all, we are talking about:

  • the online character of the trade;
  • the high volatility of the prices of digital assets;
  • the presence of a tendency to form price gaps.

These are the most distinguishing peculiarities of the crypto market.


For this reason, not every indicator that effectively predicts the direction of the price movement on fiat instruments does its job on cryptocurrency pairs. In this article, we have collected the most effective cryptocurrency market analysis tools that should be used to build a profitable trading strategy. Find the best indicator for cryptocurrency trading.

Classic indicators

The cryptocurrency market is on a long side channel, so the beginning of a new trend that can stay in the long term remains open to question. But to make a profit, less significant price movements are suitable, to determine the beginning of which classic indicators can be successfully used.

Moving average

Like the famous macd, or like a widespread momentum, this indicator is familiar to any trader, in the “basic” configuration, using only two parameters for calculation:

  • period value – the number of previous “candles” used to calculate the average current price value;
  • type of prices – opening, closing, maximum, or minimum of each time interval.

The smaller the period, the closer the moving average follows the shape of the chart. This can be said about the exponential moving average.

Main peculiarities

An increase in this parameter includes a larger number of “candles” in the calculation, which leads to the construction of a more “flat” line. Many professional bitcoin traders also support the use of alternative calculation options that provide exponential and weighted averaging, but the basic principle remains unchanged.

Useful tips

A significant value of the parameter allows you to compensate for the “price noise” when you buy or sell virtual money, but you should not get carried away with an increase in the period: if the values ​​are too large, the signals will lag.


If price movements are in the horizontal price channel and no explicit trend direction is visible, then the use of top trend indicators will lead to a large number of false signals. Oscillator-type indicators will allow you to continue active trading even in such conditions. Such an approach makes it possible:

  • to evaluate even minor changes;
  • to see the beginning of a new trend where analysis of absolute prices does not allow this;
  • to carry out profound technical analysis.

A stochastic oscillator is one of the simplest and most effective tools.

Stochastic oscillator

The main elements of this technical analysis tool are two lines:

  • % K – “fast” curve – the result of calculating the relative value of the price in a given period;
  • % D – the slower signal line, is a moving average from the first curve.

The usage of these two lines simplifies the process of technical analysis.

Cyclical changes

Most cyclical changes occur within a relative range of values of 20-80, but if the curves contact these boundaries – overbought (80-100) or oversold (0-20) zones. The increasing distance between the main and the signal line of the stochastics indicates an increase in the relative strength of the price impulse, which in some cases allows us to predict the value of the subsequent increase or decrease in quotations.


The main reason that the classical methods of technical analysis fail in the cryptocurrency market is significant volatility. To at least partially overcome the dependence on the period of averaging of price values, it is necessary to use other good approaches to analysis. The most effective and most straightforward method for solving this problem is to build dynamic price channels.

Posted: 2.07.2020 | Dawid Siłowacki
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