In this short article I want to show and explain the importance of the exponential moving average as well as trend lines in all markets (crypto, stocks etc.).
In general chart-pattern are used by professionell and amateur traders all over the world. The exponentiell moving average is mainly made for recognizing market trends without strong short term volatility. The moving average can be set by considering last X candles. For longterm traders i suggest using the EMA50 in combination with the EMA200. But also for lower times frames its quite useful for getting out specific information.
Please check picture below.
This chart is Nasdaq in a daily time frame. Every single candle represents one day. The green line is the EMA200 the red line represents the EMA50. For long term traders an easy step into an investment would be an up cross of the candles above both EMAs . As long as we stay far enough above the EMA200, we still be in an uptrend. An appropriate step out of this long trade would be a crossing downwards the EMA200 in Feb2022. Easily made over 80% in under two years ;-)
How to transfer this knowledge with shorter terms in trading?
For intraday traders of course EMA playing an importance role. But not only for traders also for bot traders in our community. You can easily find significant supports/resistance levels or holding and breaks of these EMA. In the picture below you will see BTC either follows trend lines or smooth moving above the EMA50 for example on lower time frames. The fact that its general common pattern, a lot of people using and taking advantage of it.
Let's check now another example even on lower timeframes (15min, one candle represents 15min) to see the information out of the EMAs 50/200. On left side marked in the green circle we see a strong sell off and breaking down after bouncing on the EMA50. If BTC in this timeframe quickly breaks both EMAs and the probability is really high to break even further downwards.
Only after zooming out the zooming out on the one hour time frame it's clearly how far we will move downwards. There are a several support zone around 22.7k or 22.4k.
Zooming in again on the current situation you clearly see we trying to keep the EMA50 for more than 8 x 1h candles
Therefore either for shares, cryptos or anything else to recognize the trends its really important using the EMAs. If you a long term trader you will find great buy/sell opportunities and even intraday you will get an idea about current behavior of upcoming movements and trends.
Of course all of these information is no financial advice, but its great information considering easily the EMAs in different situation to understand the current situation and trend in the market.
I hope you liked this short article of today and I will be happy if you share or like.