These are the 5 indicators you need to watch for bitcoin

After the “bull” months, the cryptocurrency market took a negative trend before mid-May, when we witnessed a huge drop in prices not only for bitcoin, but across the entire market.

However, according to many experts, their popularity is still gaining momentum, and there are more and more institutions in the world that allow payment in digital currencies.

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From the beginning of their trading on the stock exchanges, cryptocurrencies have been a popular financial asset for investors who have seen their potential in times when digital currencies were not widely known, and were able to buy and “value” at incredibly low prices.

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Traders take advantage of cryptocurrency volatility, help with indicators and market monitoring

In addition to potential, however, cryptocurrencies are also known for their high volatility, ie large price changes in a short time. It, in turn, plays into the hands of traders whose goal is to earn on price fluctuations by buying lower and selling higher, or by using various financial derivatives or entering a short or long position.

Today, such trading is relatively easily accessible to really everyone, but many people enter it with the vision of a quick and large profit, and then end up in negative values. An experienced trader always counts on the loss of his position and enters the stores in such a way that he has the greatest chance of preventing it.

In the case of cryptomen trading, it can help not only to monitor the candle formations on the chart, which we will not deal with in this article, but also a number of indicators that can be used to estimate which direction the market will move.

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We therefore decided to briefly present some basic ones that can help in the trade in bitcoin, but also in other cryptocurrencies.

Relative Strength Index (RSI) – shows when the price of cryptocurrency awaits correction and when growth

RSI, or relative force index, was developed by the American engineer Welles Wilder, who, by the way he died only in April this year. However, he left traders an indicator to help identify when the price of a cryptocurrency is too far from its “real” value.

RSI thus gives the trader the opportunity to identify great entry points where the cryptocurrency is underestimated and, conversely, to “warn” him at a time when the cryptocurrency is overestimated.

RSI is calculated as RSI = 100 – (100 / (1 + RS)), where RS represents the average increase in the closing price for n period (most often 14). The resulting value is therefore in the range of 0 – 100, while the indicator has 2 important levels, above 70 and below 30.

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When an RSI exceeds 70, it means that the asset is overstated or overvalued, while an RSI below 30 indicates an oversold or undervalued asset. It is thus relatively easy to predict when the asset will “cool down” and from high values ​​there will be a more or less correction, and vice versa.

Moving Average (MA) – marks support and resistance levels
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