50-SMA Did Not Let Me Down. It Is The Best!
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:
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.
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