Here’s Day 8, written clearly and practically, guiding you through chart indicators that help you make better trading decisions.

Day 8 – Reading Crypto Charts (Part 2: Indicators)



Great work identifying candlestick patterns on Day 7! Now it’s time to add another layer to your analysis – indicators.

Indicators are tools built into charts that help you understand market behavior, confirm trends, and decide when to buy or sell.

🔹 What Are Indicators?

Indicators are mathematical calculations based on price and volume data. They help you:
✔ Identify the strength of a trend
✔ See if a coin is overbought or oversold
✔ Spot possible reversals before they happen

🔹 Important Indicators for Beginners

1️⃣ Relative Strength Index (RSI)

  • Measures how fast the price is rising or falling.

  • Values range from 0 to 100.

  • 📊

    • Above 70 → The coin may be overbought (prices too high, might drop soon).

    • Below 30 → The coin may be oversold (prices too low, might rise soon).

Example:
If RSI shows 75, it means the price increased too quickly and may soon pull back.

2️⃣ Moving Average Convergence Divergence (MACD)

  • Helps you spot changes in momentum.

  • Consists of two lines and a histogram.

  • When the faster line crosses above the slower one → buy signal

  • When it crosses below → sell signal

Example:
You see the MACD line crossing above the signal line → buyers are gaining strength.

3️⃣ Moving Averages (MA)

  • Shows the average price over a period (e.g. 20 days, 50 days).

  • Helps smooth out price fluctuations and show the trend direction.

Example:
If the price is above the 50-day moving average, the trend is bullish.

4️⃣ Volume Indicator

  • Shows how much cryptocurrency is being traded.

  • High volume confirms trends, while low volume may signal weakness.

Example:
Price is rising with increasing volume → strong uptrend.

🔹 How Indicators Help You

  • Avoid emotional trading.

  • Know if prices are overbought or oversold.

  • Confirm whether a trend is strong or likely to reverse.

  • Choose safer entry and exit points.

🔹 Practical Use Case

Ravi is analyzing Cardano (ADA).
✔ The price is rising, but RSI shows 78 → It’s overbought.
✔ He waits until RSI drops below 70 before buying again.
This way, he avoids buying at the peak and minimizes risk.

🔹 Tips When Using Indicators

✔ Don’t rely on one indicator alone. Combine two or more for better accuracy.
✔ Indicators are guides, not guarantees.
✔ Practice reading them over several charts before using them in real trades.

✅ Day 8 Task

  1. Open the chart of Bitcoin or any other coin.

  2. Add the RSI indicator and note its current value.

  3. Add the MACD and observe if the lines are crossing.

  4. Add the 50-day moving average and check if the price is above or below it.

  5. Check the volume and see if it’s increasing or decreasing with price changes.

Write down your observations and how you think it might affect your next trade.

Tomorrow, Day 9, we’ll explore how emotions influence trading and how to stay calm and disciplined during market fluctuations.