Today we look at the BB and MACD indicators. These are powerful tools for analyzing price behavior and assessing the likely direction of market movement.
BB (Bollinger Bands) uses three bands to visualize price movement. The upper and lower bands reflect standard deviations from the average line.
If the price crosses one of these bands, it signals a significant deviation from the norm. Such moments can be indicators of overbought or oversold conditions of the asset.
For example, the screenshot shows how the price goes beyond the upper BB band. This event indicates a possible overbought condition of the asset.
Often, such spikes end with a correction, when the price returns within the bounds of the standard deviation bands. The example shows how after a sharp rise, the price returns to more balanced levels.
MACD is a tool for assessing the strength and direction of the trend. It is built based on the difference between two EMAs (exponential moving averages).
The most commonly used periods are 12 and 26. The difference between these averages forms the main MACD line, while the signal line helps identify key moments of trend change.
The chart shows how the crossing of moving averages on the MACD is accompanied by a change in trend direction.
If the MACD line crosses the signal line from top to bottom, it is likely the beginning of a downward trend, as shown in the example. If the crossing occurs from bottom to top, a possible price increase.
Why 'possible'?
Because there are no means or tools that will guarantee the exact behavior of the price, no matter how many 'stars align'.
The market is emotions and people, not charts and numbers.
But using such tools helps us understand what is happening or will happen.
We are already making an example where we will apply and show what we have just discussed.
T.me/btc_inside_vip
