After Bitcoin kept going down for days the last line of defense, in my opinion, was the 50 Day Simple Moving Average on a daily chart. I wrote about it in details yesterday in the following post:
@geekgirl/will-50-sma-on-daily-charts-reverse-the-bitcoin-price-movement
When I published that post BTC price was at $52257. Now it is trading above $55k. Of course, I had to make a follow up post, bragging about my chart reading skillz, etc. Lol.
No. This post is not about bragging that I was right. It could have easily gone below 50k and kept going downwards. I am no expert in trading or charts. I am just learning.
This post is about 50 day simple moving average and how I became fond of it over time. Go ahead and display in your own charts 50-SMA and go through multiple charts. You will see that most often whenever stocks or crypto prices go below 50-SMA, they are likely to go down even more. Opposite is also true, whenever stocks or crypto go above 50-SMA, they continue keep going up.
Moreover, this moving average seem to serve as a support or resistance depending on the situation. Now the main question is how long this downward or upward trend last once candle crosses above or below 50-SMA? It is alway different. While this strategy alone can be signifiant, having proper exist strategy as always is important. Otherwise, there is no point of entering into a trade.
Let's also be clear what I mean with price and the candlestick. Historical price data for tickers provides values such as Open, Close, High, and Low. Ideally, I would like to see all of them above 50-SMA to consider it as a potential long position. Conversely, I would like to see all - open, close, high, and low below SMA-50 so consider a short position. Perhaps I could disregard wicks, as the low value for long position and high value for short position.
The main idea being if 50-SMA is broken either upwards or downwards, it could be a potential indicator of the the future movements of the price.
In that post, I wrote how my main concern and position was in LTC. I am not worried about BTC, since it is a long term investment. Whatever happens happens. But with short term trading account I always curious what is going on with price action. Now, the charts for LTC don't look good. On daily chart LTC price is still below 50-SMA while it is still pointing to upward trend.
I also have to consider the other fact that LTC follows BTC. Some or many may disagree with this assessment. But that it is how I view it. I trade LTC based on BTC movements. It may be wrong or stupid. But that's just me. I will hold on to this trade as BTC is trying to make moves.
Things may change quick and to either direction. I am just glad that 50-SMA didn't let me down this time. It is good to be on the right side once in a while.