Whereby such statements should always be taken with caution and should never be the sole component of a decision-making process.Ĭoncrete buy and sell signals arise when the faster (the one with the shorter period) of the switched on moving averages breaks through the slower moving average from the bottom to the top.

If prices continue to fall below the relevant line, there is a chance of a trend reversal to the upside. In the opposite case, a weak buy signal can be seen. If the moving average describes a descending curve and prices have been above this moving average so far, then selling should be done. A trend reversal with retracements may also be imminent in some cases. Then it can quickly happen that a reversion to the moving average occurs.

It should always be kept in mind the so-called danger of overheating, which occurs when the prices that are above the moving average line of interest continue to rise. If the price quotes below the moving average, then this is to be understood as a bearish signal. If the price of a cryptocurrency quotes above the selected moving average, then it can be considered a bullish signal. As the number of n-periods increases, the course of the price is smoothed more and more in order to get a clearer picture and to be able to recognize trends better. This allows the average price to be seen at a glance. The moving average is used to show the course of a price over a certain period of time. Definition and Interpretation of Moving Average.

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