Technical and Market Analysis · Crypto Trading Guide

Moving averages, RSI and ATR answer different questions. Use them to describe trend, momentum and movement size without counting the same evidence twice.

Start with the input

A simple moving average is the mean of a selected number of observations. Closing prices of 10, 11, 12, 11 and 16 average 12. When the window advances, the oldest observation drops out. Smoothing reduces short term variation but introduces delay. An exponential average uses different weights, so settings must be recorded.

Interpret momentum carefully

RSI compares smoothed gains with smoothed losses over a selected window and reports a bounded oscillator. A high reading can accompany a strong trend for some time. It is not an automatic sell instruction. A low reading similarly does not guarantee a rebound. Define the calculation window and whether you use a completed candle before comparing tests.

Use ATR for movement size

True range considers the current high to low range and the gaps from the previous close. If the high is 105, low 101 and prior close 99, the candidates are 4, 6 and 2, making true range 6. ATR smooths such observations. It measures movement size rather than direction. A hypothetical ATR of $2 is context for a stop distance, not a prediction that tomorrow’s move is limited to $2.

Avoid indicator stacking

Several indicators can be transformations of the same price series. Their agreement is not equivalent to independent evidence. Give each tool a role, such as describing the trend or scaling position risk, and test the complete rule. If volatility rises and the planned exit distance widens, position size must be reconsidered. Preserve parameter choices and compare simple alternatives before concluding that a complicated combination adds value.

Try it yourself

High is 52, low is 49 and the previous close is 55. What is true range?

Show the worked answer

The candidates are 3, 3 and 6. True range is 6. It does not indicate whether the next movement will be up or down.

Further reading

Educational material. Examples and rates are hypothetical, not trade recommendations. Product terms, eligibility and risks vary by venue and jurisdiction.

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