What is SMA, EMA? Why do the prices of currency pairs always return to check this line???
- If you guys don't know what MA is, you shouldn't participate in this market, MA is considered the holy grail in all financial markets!
- MA means "moving average", SMA 14 means the moving average of the 14 most recent candles!
- In other words, you can consider SMA 14 as the average price of that asset within 14 candles
- This average price is considered the price at which buyers are willing to buy that asset => this is where the balance between the Buyer and the Seller
- When the price crosses the MA line, it shows that the BUYER has a greater demand to buy than the SELLER => this is a buy signal
- When the price is lower than the MA line, it shows that the demand to buy is weakening, at this time whoever owns the coin and sells first will make a lot of profit => a sell signal
- The EMA line is a weighted MA line, meaning that it uses the 2 most recent candles (default) to align the MA line to suit the market, EMA is trusted by most people!
- The common MA/EMA lines are 9, 12, 26,... equivalent to a week and a half, 2 weeks, 1 month (the forex market only has 6 days / week)
=> when switching to the 24/7 crypto market, these numbers may be different, but most people still use the same EMA lines as the forex side (EMA 50, EMA 100, EMA 200...)
- In addition to EMA, there are hundreds of other MA lines such as DEMA, TEMA, WMA, VWEMA, HMA, ...
** The Crypto market sometimes runs too virtual, maybe because people are too FOMO while few people really know what MA, EMA are :(
