What's going on everyone? My name is nicholas martin here at datadash today is september 16th of 2017.. So i've, been getting a lot of feedback on my channel about doing very short, burst videos that cover specific technical indicators or tools that you can use in your crypto trading and investing, and i wanted to start off very simple today.
Well, no pun intended by using the simple moving averages. They're, one of my favorite tools that you can use in either trading or investing for cryptocurrencies, and they can really help. You do a few things, such as finding supporter resistance for certain prices.
As well as good buying points on pullbacks, so that being said, let's, jump right into it and discuss how we cannot only set up the simple moving averages, but also truly utilize them to build value in our trading and investing so right off.
The bat we're using trading view right now, uh most of these uh different trading platforms, all provide moving averages. It's, one of the most basic tools you can use, but they're very powerful. At the same time, so you're, going to want to go to your indicators, tab or whatever it might be on your exchange and you're going to want to type either moving average or ma standing for moving average.
So i'm, going to go ahead and click this three times, because we're, going to print three on our chart with different valuations. So now right at the start, you probably only see one because they're. All in default by the value of nine, but we're, going to change that.
So we're, going to go to our formatting gear tab here and we're, going to change the length of the moving average and we'll. Learn about what these mean. So i would say, go ahead and put 50 and then on the other one put 100 and then on the last one we're, going to put 200.
okay awesome. Now we see three different lines that are moving over time on the chart. We're, currently looking at the daily chart, meaning that each of these candles on the chart is a daily candle and these lines are adjusting to those daily candles price actions.
So what exactly are simple moving averages? What is a general moving average in general so basically to get a concept of it? A lot of people have a hard time really understanding it, but i'm, going to try and explain it in the most simple, down-to-earth way possible.
Each candle has a closing price action, meaning that at the end of the day, it has a closing price just how it has an opening price. There's, a closing the moving average depending on its numerical value.
Let's, say, for example, the 50 sma will take the last closing 50 candles of price action and average it together. So in the case right here, we can see that the 50 sma has been slowly increasing over time because, quite frankly, the past 50 days of price action have gotten a lot higher there's been a lot of optimism in bitcoin overall, ever since The past 50 days, and because of that this light blue line, which is the 50 smas we can see up here by its respected color, is going up, and then we can also see that, with the 100 day and the 200 day as general assets move up, You'll, see these indicators come up as well, because it's, taking the past 100 days of price action, and that averaging it out.
Okay, so it takes the past hundred days of price action, divides it by 100 and you get the average so that's, how you really kind of understand, fundamentally what the smas are, but how do we really use them in trading strategies? Well, i cover this a lot more detail and my trading cryptocurrencies for beginners and intermediates videos, which i recommend you go check out, but i'm gonna show you a few simple strategies that you can use to really understand how to use the Smas, so they're, most powerful.
In my opinion, and i guess everyone's got a different opinion on it and the sense of trading and investing. But i would say that the mass majority of people would tell you that the most powerful way to use them is on the daily charts.
As you can see, we have the daily can um the daily candles printed on here. So each of these represented data, as i stated before, and we can see that a lot of the times price action lines up here. So, for example, we found on the past pullback that support was being held on the 50 day now the 50 day is a confidence indicator.
In my mind, it's, a way that so long as the price remains above the 50 day. It might dip a little bit below it, but as long as you can generally see it, holding on the 50 day there's confidence in the market.
It means that there's been a pullback, but it's still. Holding the majority of its gains and it's looking to charge upwards now, if it breaks the day, that means that a little bit of fear is probably coming into the market.
A little bit of a sell side is coming. Maybe something's a little overbought and we can see that it came down to correct to the 100 day again. Another estimate that we can look for for support and in this case it did find support now if it went through and continue to go down to.
The 200-day 200-day is like full-scale pullback mode when there's, a lot of fear in the market. When there's a necessary pullback, something is extremely overextended and usually you see something come to the 200-day over a longer term spectrum or a longer-term pullback.
So we didn't, see it with bitcoin around back in june and july, and this time around we saw the exact same thing. We saw a breach of the 50-day on this recent pullback and then we found some support at the 100-day and look at the rebound that came after if you would have just simply bought around the 100 days so long as it remained there again.
These indicators can be extremely powerful for knowing when to purchase pullbacks when we're waiting for the market to come down. Where can our price levels be set so very powerful tool very awesome to use and remember the more you increase the number? The more of a kind of fear there is on the market, the more kind of downside there is usually the 200.
If you & # 39, ve had an uptrend is way behind the 50 or 100 day, but it can really depend if the price action's shaky. You know over time they can overlap, but on a long-term run-up. This is a great pattern of the 50-day 100-day and 200-day, where they're.
Not the 50-100 day are far away from the 200-day. That shows there's. Confidence in the market so best way to use it, but i & # 39. Ll also show you that what's, really nice about the simple moving averages? Is they adjust to what kind of chart you're? Looking at so, for example, the other one i recommend is on the hourly.
I recommend you don't, always look at the hourly unless you're really doing day trading or swing trading, but quite frankly, it's very powerful. So, as we talked about in my recent video on my channel after we saw a strong rebound in bitcoin, we saw that it came up found price support on the 50 hour, and you can also use this as an indicator as uh for comebacks and price actions.
So we can see that it found support here continued to rally up had some resistance at the 100 hour got through it and it couldn't hold it soundly and it came down, but look it's found support again at the 50 hour, so again, again as we go up, there are confidence factors in the price action, as it can confirm, support along these lines and continue higher.
That most likely means that the confidence come has come back in price action and we can see it going to new highs. So that is very generally how you use the smas. If you want to learn more about it, i definitely recommend, as i stated, to go watch my trading cryptocurrencies for beginners and intermediates videos.
They're, really great tools to really learn how to get into trading and investing in cryptocurrencies, and i think that these tools, if you can learn how to use them properly and use them how you like you, can really become a successful trader and Investor and i'm glad to help teach you to become that certain individual that you aim to be.
Thank you all so much for watching. Please consider liking and subscribing if you got an indicator or a topic. You want me to cover on this series, leave it down in the comments down below, but until then everyone, i will see you all in the next video stay tuned.