Moving Average

A moving average is an indicator that smooths price data by averaging the closing prices of the last N periods, recalculated as each new period completes, producing a line that follows price with less noise. Its two main uses are identifying trend direction — price above a rising moving average suggests an uptrend — and acting as dynamic support or resistance that adapts as price moves. Common lengths in crypto are the 20, 50, 100, and 200 period averages, applied to any timeframe.

For example, the 200-day moving average of Bitcoin is widely watched as a rough boundary between bull and bear conditions: extended periods above it are associated with uptrends, and decisive breaks below it with weakness. A swing trader might instead watch whether the daily close holds above the 50-day average during a rally.

The main variants are the simple moving average, which weights all periods equally, and the exponential moving average, which weights recent prices more heavily and reacts faster. A common misconception is that moving averages predict price; they are lagging indicators computed entirely from past data, so they describe the trend that already exists rather than forecasting the next move.