Moving average (SMA, EMA)

A moving average smooths out price data by calculating the average closing price over a set number of periods, updating with each new candle. It helps traders see the underlying trend beneath daily noise.

The simple moving average (SMA) gives equal weight to every period. The exponential moving average (EMA) gives more weight to recent prices, so it reacts faster. Common settings include the 20, 50 and 200-day averages. The 200-day moving average is widely watched as a dividing line between long-term uptrends and downtrends for bitcoin.

When a shorter average crosses above a longer one, such as the 50-day crossing the 200-day, it is called a golden cross and is read as bullish. The opposite is a death cross. Bitcoin analysts also track the 200-week moving average, which has historically marked areas near major bear-market lows. Moving averages are lagging indicators: they confirm trends after they start and generate many false signals in sideways markets.