Based on signals, generated by the oscillator, (BTC/USD) is currently in an UPTREND mode. The active signal is BUY.
At its core, is a very powerful indicator, and provides good forecasting accuracy if used accurately.
In this Trade Idea I’d like to discuss the mechanics of the and how it applies to the current situation on BTC/USD. Continue reading, and you’ll get the best-in-industry knowledge from an experienced trader, condensed just in the one-page analysis!
The mechanics of the indicator in plain English
The stands for the moving-average convergence/divergence oscillator. It is constructed by two lines, the line and the signal line:
The line is the difference between two exponentially smoothed moving averages (EMAs) with fast and slow periods. We apply 7 and 30 days as inputs.
The Signal line is simply an of line. We apply the 5-days .
The indicator oscillates around zero and has no upper or lower limit.
Traders use the in in three ways:
1. By analyzing the crossovers of the line and the signal line
2. By analyzing whether the is outside its normal range
3. By using on the itself (convergence/divergence).
Interpretation of the current trend using the oscillator
Let’s review each of these signals in application to the current trend.
1. The line is significantly above zero and is moving up. This is a storing signal indicating that BTC/USD is in an UPTREND. Mathematically, it results from the fast moving above the slow . Practically, it means that the bitcoin’s short-term trend is upwards and is accelerating, as compared to the long-term price trend.
2. We can see that on Mar 21 the line has crossed over the Signal line from above to below it, which was the result of bitcoin’s unexpected price decline on that day. Although it indicates that an uptrend has decelerated, as compared to the previous week’s dynamics, it still does not indicate a trend reversal. We should interpret this market dynamics as a normal , but not as a change in trend.
3. There are no on the itself, which would indicate a convergence or a divergence with the price. This further confirms that the current trend up is valid, and you should continue holding your open long position in BTC/USD.
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Monfex!
Disclaimer
This report is for information purposes only and should not be considered a solicitation to buy or sell any cryptocurrency or cryptocurrency product. Monfex accepts no responsibility for any consequences resulting from the use of this material. No representation or warranty is given as to the accuracy, timeliness, or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
© 2019 Monfex. All Rights Reserved.
Published at Fri, 22 Mar 2019 16:44:10 +0000
