50+ Bitcoin Trading Indicators You Absolutely Need to Know
Trading indicators can feel overwhelming, but we're here to make sense of the chaos and help you understand which ones are actually worth your time.
1. Simple Moving Average (SMA)
What it is: The average of the closing prices over a specific period.
Use: Identifying the overall direction of a trend by smoothing out price fluctuations.
Calculation: Sum the closing prices over n days and divide by n.
SMA is often used to smooth price data, but it's also valuable for determining support and resistance levels.
2. Relative Strength Index (RSI)
What it is: A momentum oscillator that measures the speed and change of price movements.
Use: Identifying overbought (above 70) and oversold (below 30) market conditions.
Calculation: Uses the average gain and loss over a period (typically 14 days).
RSI is not only about overbought and oversold levels. It can also provide divergence signals when the price and RSI move in opposite directions, which might indicate a trend reversal.
3. Exponential Moving Average (EMA)
What it is: A moving average that gives more weight to recent prices, making it more responsive to new information.
Use: Reacting more quickly to price changes compared to the SMA, useful for identifying recent trend changes.
Calculation: Uses a smoothing factor that gives greater weight to recent prices.
4. Moving Average Convergence Divergence (MACD)
What it is: A trend-following momentum indicator using two EMAs.
Use: Spotting changes in momentum and trend direction.
Calculation: Difference between the 12-day EMA and the 26-day EMA. Also plots a signal line (9-day EMA of MACD).
MACD also involves the MACD histogram, which is the difference between the MACD line and the signal line. It helps visualize momentum changes.
5. On-Balance Volume (OBV)
What it is: Measures cumulative buying and selling pressure using volume.
Use: Confirming price trends with volume data, indicating whether volume supports the price movement.
Calculation: Adds daily volume on up days and subtracts on down days.
OBV primarily tracks accumulation and distribution, and its slope is considered to indicate the likely price direction.
6. Bollinger Bands
What it is: A volatility indicator showing a band of two standard deviations above and below an SMA.
Use: Determining overbought and oversold levels based on price touching or crossing the bands.
Calculation: Bands are calculated using the SMA and standard deviation of price.
Price touching or moving outside the bands may not always indicate overbought or oversold conditions. Sometimes, it shows high momentum in the direction of the price movement.
7. Average True Range (ATR)
What it is: Measures market volatility by averaging the true range over a set number of days.
Use: Assessing market volatility to set stop-loss orders or gauge potential breakouts.
Calculation: True Range is the maximum of:
Current High - Current Low
Absolute value of Current High - Previous Close
Absolute value of Current Low - Previous Close
8. Fibonacci Retracement
What it is: A tool using horizontal lines at Fibonacci levels (23.6%, 38.2%, 61.8%, etc.) to identify potential support and resistance.
Use: Predicting price pullbacks and levels of support/resistance.
Calculation: Draw lines at key Fibonacci levels between a significant high and low.
Fibonacci levels can be subjective, and traders often use different key levels. Additionally, they are not exact prediction tools but rather provide potential zones of reversal.
9. 50-Day and 200-Day SMA Crossovers (Golden Cross / Death Cross)
What it is: Crossovers of the 50-day SMA and 200-day SMA.
Use: A "Golden Cross" (50-day crosses above 200-day) signals a bullish market, while a "Death Cross" (50-day crosses below 200-day) signals a bearish market.
Calculation: Compare the current 50-day SMA value with the 200-day SMA value to identify crossovers.
10. Average Directional Index (ADX)
What it is: Measures the strength of a trend, regardless of its direction.
Use: Identifying whether a trend is strong or weak (values above 25 indicate a strong trend).
Calculation: Uses the smoothed moving average of price range expansion over a given period.
ADX measures trend strength but does not indicate the direction. Traders need to look at the +DI and -DI lines for trend direction.
11. Volume Weighted Average Price (VWAP)
What it is: The average price traded throughout the day, weighted by volume.
Use: Identifying the true average trading price for a given day; often used by intraday traders.
12. Stochastic Oscillator
What it is: A momentum indicator comparing a particular closing price to a range of its prices over a period.
Use: Identifying overbought (above 80) or oversold (below 20) conditions.
13. Commodity Channel Index (CCI)
What it is: Measures the difference between the current price and its average price.
Use: Spotting overbought/oversold conditions or emerging trends.
14. Parabolic SAR
What it is: Plots points on a price chart to indicate potential reversal levels.
Use: Setting trailing stop-loss levels during trends.
Calculation: SAR is adjusted each day based on the extreme price and acceleration factor.
15. Accumulation/Distribution Line (A/D Line)
What it is: Combines price and volume to determine cumulative buying or selling pressure.
Use: Identifying whether a stock is being accumulated (buying) or distributed (selling).
Calculation: Based on the money flow multiplier, which is applied to volume.
16. Donchian Channels
What it is: Uses the highest high and lowest low of a specific period to create a channel.
Use: Identifying breakouts; a price above the upper channel can indicate a breakout.
Calculation: Upper Band = Highest high over last n periods, Lower Band = Lowest low over last n periods.
17. Rate of Change (ROC)
What it is: Measures the percentage change in price over a given period.
Use: Identifying trend strength or potential reversals based on momentum.
18. Chaikin Money Flow (CMF)
What it is: Combines price and volume to gauge buying/selling pressure.
Use: Confirming price movements; values above 0 indicate buying pressure.
19. Money Flow Index (MFI)
What it is: A volume-weighted version of the RSI, measuring buying and selling pressure.
Use: Identifying overbought/oversold conditions based on price and volume.
20. Linear Regression Channels
What it is: A statistical tool that fits price movement into a linear trend channel.
Use: Predicting price trends and reversals by evaluating deviations from the trend line.
Calculation: Uses least squares regression to fit a straight line through the price data.
21. Keltner Channels
What it is: Similar to Bollinger Bands, Keltner Channels consist of an EMA and volatility-based bands using the Average True Range (ATR).
Use: Identifying breakouts, overbought, and oversold levels.
22. Price Action Patterns
What it is: Price Action is an analysis technique that involves looking at historical price movements and identifying recognizable patterns.
Use: Predicting market behavior by identifying patterns like Head & Shoulders, Double Tops, and more.
Calculation: Price action analysis relies on visually spotting patterns rather than numerical calculations, which makes it more subjective.
23. Williams %R
What it is: A momentum indicator that measures the level of the closing price relative to the high-low range over a set period.
Use: Identifying overbought (above -20) and oversold (below -80) conditions.
24. Gann Levels
What it is: Diagonal lines called Gann angles, drawn from significant price points at certain angles to predict future price movements.
Use: Identifying support and resistance levels over time based on historical price action.
Calculation: Calculated using specific angles and time intervals that divide price movement by time.
25. Bull/Bear Power
What it is: Measures the strength of bulls or bears by comparing highs/lows with a moving average.
Use: Gauging market strength and momentum shifts.
Calculation:
Bull Power = High Price - EMA
Bear Power = Low Price - EMA
26. Ultimate Oscillator
What it is: A momentum indicator that considers three different timeframes to avoid issues like false divergence signals.
Use: Spotting divergences and potential price reversals.
Calculation: Uses weighted averages of three different timeframes (e.g., 7, 14, and 28 periods) to create an oscillator value.
27. Vortex Indicator
What it is: Identifies trend direction by plotting positive and negative trend lines.
Use: Indicating trend changes when the positive and negative lines cross.
Calculation: Based on the true range and directional movement over a given period.
28. Klinger Oscillator
What it is: Uses volume flow to predict long-term trends while remaining sensitive enough to detect short-term fluctuations.
Use: Spotting changes in volume flow and potential trend reversals.
Calculation: Uses a combination of volume, price trends, and short and long EMA to generate the oscillator.
29. Standard Deviation
What it is: A measure of the dispersion of prices from the mean.
Use: Quantifying volatility; a higher standard deviation indicates higher price variability.
Calculation: Takes the square root of the average squared deviations from the mean price.
A higher standard deviation can indicate that prices are spread out over a wider range, implying increased risk or volatility.
30. Chaikin Oscillator
What it is: Measures the momentum of the Accumulation/Distribution Line.
Use: Confirming trends in buying or selling pressure by using volume and price movement.
Calculation: Difference between a short-term EMA (usually 3-day) and a long-term EMA (usually 10-day) of the A/D Line.
The Chaikin Oscillator measures the momentum of the Accumulation/Distribution Line, and is not just a trend confirmation tool.
31. Donchian Channel
What it is: Plots bands based on the highest high and lowest low over a specific period.
Use: Identifying potential breakouts and assessing price volatility.
Calculation:
Upper Band = Highest High over last n periods.
Lower Band = Lowest Low over last n periods.
32. Ichimoku Cloud
What it is: A combination of five indicators that provides insight into support/resistance, momentum, and trend direction.
Use: Identifying trends and forecasting future areas of support and resistance.
Calculation:
Tenkan-sen (Conversion Line): (9-period high + 9-period low) / 2
Kijun-sen (Base Line): (26-period high + 26-period low) / 2
Senkou Span A (Leading Span A): (Tenkan-sen + Kijun-sen) / 2 (plotted 26 periods ahead)
Senkou Span B (Leading Span B): (52-period high + 52-period low) / 2 (plotted 26 periods ahead)
Chikou Span (Lagging Span): Today's closing price plotted 26 periods behind.
The Ichimoku Cloud is best used as a comprehensive tool. It includes multiple components for support/resistance, trend direction, and entry/exit signals.
33. Linear Regression Channels
What it is: Uses statistical linear regression to create a channel around the current price trend.
Use: Predicting potential trend continuation and identifying points of overextension.
Calculation: Applies the least-squares regression method to determine the best fit line, along with upper and lower bands.
34. Money Flow Index (MFI)
What it is: A momentum indicator that incorporates both price and volume to measure buying and selling pressure.
Use: Identifying overbought (above 80) and oversold (below 20) conditions.
Calculation:
Typical Price: (High + Low + Close) / 3
Money Flow: Typical Price ×\times× Volume
MFI is then calculated similar to RSI, with adjustments for volume.
35. Chaikin Money Flow (CMF)
What it is: Combines price and volume to determine whether an asset is being accumulated or distributed.
Use: Confirming the price trend, identifying buying/selling pressure.
36. Price Rate of Change (ROC)
What it is: Measures the percentage change in the price from one period to another.
Use: Identifying overbought or oversold conditions, signaling potential trend reversals.
37. Coppock Curve
What it is: A long-term price momentum indicator developed to identify buying opportunities in the market.
Use: Spotting long-term buying opportunities, especially in major market indices.
Calculation: A 10-month weighted moving average of the sum of 14-month and 11-month ROC values.
38. Acceleration Bands (ABands)
What it is: A set of bands around a moving average that adapts to volatility.
Use: Identifying potential breakout opportunities by capturing a wider range of price movements.
Calculation: Uses an SMA, upper and lower bands, calculated based on high/low prices and volatility factors.
39. Elder Ray Index
What it is: An indicator developed by Alexander Elder that combines a bullish and bearish component to assess the strength of bulls versus bears.
Use: Gauging the buying and selling strength in a market.
Calculation:
Bull Power = High - EMA
Bear Power = Low - EMA
40. Chande Momentum Oscillator (CMO)
What it is: A momentum indicator similar to RSI, but it measures the momentum on both the upside and downside.
Use: Identifying overbought and oversold conditions more symmetrically.
41. TRIX Indicator
What it is: A triple-smoothed EMA that measures the rate of change of a trend.
Use: Filtering out market noise and confirming trend direction; also used as a momentum oscillator.
Calculation: Uses an EMA smoothed three times over a specific period and calculates the rate of change.
42. Detrended Price Oscillator (DPO)
What it is: An oscillator that removes longer-term trends from price action to isolate short-term cycles.
Use: Identifying cyclical trends and potential reversals without the interference of longer trends.
Calculation: A centered moving average is subtracted from the price, effectively "detrending" the data.
43. SuperTrend Indicator
What it is: A trend-following indicator that combines the ATR to determine the volatility-adjusted trend direction.
Use: Detecting the prevailing trend and providing buy/sell signals, effective for trailing stop losses.
Calculation: Uses the ATR to calculate upper and lower levels; a new trend is indicated when price crosses the SuperTrend level.
44. Vortex Indicator
What it is: Indicates the trend direction based on highs and lows over a specific period.
Use: Identifying trend changes when positive and negative vortex lines cross each other.
45. Relative Vigor Index (RVI)
What it is: Measures the strength of a trend by comparing closing price to the trading range.
Use: Confirming trend strength or spotting divergences to predict reversals.
46. Mass Index
What it is: A volatility indicator that identifies reversals by measuring the range expansion.
Use: Spotting trend reversals but not indicating direction.
Calculation: Uses the sum of the EMA of the high-low range over a certain period to create an index value.
47. Choppiness Index (CHOP)
What it is: Measures whether the market is choppy (sideways) or trending.
Use: Helping traders determine if the market is consolidating or trending to adjust their strategy accordingly.
Calculation: Based on the ATR and high/low range of the asset over a specified number of periods.
48. Historical Volatility (HV)
What it is: Measures how much the price of an asset varies from its mean over a specific period.
Use: Assessing risk, as assets with high historical volatility are often considered riskier.
Calculation: Calculated as the standard deviation of price returns over a given timeframe.
49. Donchian Width
What it is: Measures the distance between the upper and lower Donchian channels to assess price volatility.
Use: Identifying potential breakouts and periods of low volatility, which might lead to future explosive movements.
Calculation: Difference between the highest high and lowest low over a specified period.
50. Commodity Selection Index (CSI)
What it is: Helps identify which commodities have the highest profit potential for trend-following systems.
Use: Ranking tradable assets by volatility, ensuring that the reward-to-risk ratio justifies the investment.
Calculation: Combines ATR and trend strength over a given period.
51. Standard Error Bands
What it is: Similar to Bollinger Bands, but using the standard error of the regression line instead of standard deviation.
Use: Assessing price volatility around a linear regression trend line.
Calculation: Bands are set above and below the regression line by a multiple of the standard error.
52. Connors RSI
What it is: Combines three different components of RSI for a more precise oscillator.
Use: Identifying short-term overbought/oversold conditions.
Calculation: Combines a short-term RSI with the duration of consecutive price changes.