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Bitcoin chart analysis: The 50 day moving average

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Cryptocurrencies are so new, and so volatile. I don't typically prefer a long term moving average on a crypto chart for those reasons, but Bitcoin is different. First, it's the oldest and maybe least volatile chart (though it still moves a ton compared to stocks) of the cryptos. Second, the 50 day moving average has worked in the past many, many times as both support and resistance. Let's take a look.

This is the most recent activity for Bitcoin in candlesticks, with the blue line showing the 50 day moving average and arrows for every time it provided support or resistance to the price action:

Transfer 9/1 for 9/2/04-28jan18-btc-50ma-jpg

And before that:

Transfer 9/1 for 9/2/04-28jan18-btc-50ma-older-jpg

And even older than that:

Transfer 9/1 for 9/2/04-28jan18-btc-50ma-older2-jpg

It's not a perfect indicator. It's failed in the past and it will again in the future. That's just the nature of moving averages. But it appears to be one of the best moving averages for this particular crypto because it provides support and resistance at a more reliable rate than most of the other popular moving averages.

The 50 day MA isn't going to help us right now as we are well below it, but that gap could close within a few days considering how volatile cryptos are. With the proper sell and buy limits in place, it could help us make some money trading Bitcoin in the future. That being said, past results should not be used as guaranteed indicators for the future. It's just one tool in the box.

Brad

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The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the coins mentioned herein based on this information. We may trade these coins differently than discussed above. We use additional methods and strategies to determine fund positions. I have a small position in Bitcoin.

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