Crypto Assets Technical Analysis Guide: Secrets to Using the Four Core Indicators

Technical Analysis is not a crystal ball, but your market map and compass. It cannot predict the future, but it can tell you where you are right now and the direction that is more likely to follow.

This article will explain the four classic technical indicators in the simplest way: Moving Averages, MACD, RSI, and KDJ. We will avoid complex formulas and focus on their core logic and practical applications.

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1. Moving Average ( MA ): Market Trends and Costs

1. What is it?
Moving averages represent the average holding cost of the market over a certain period of time. For example, MA30 represents the average closing price over the past 30 days.

2. Core Usage:
Determine the trend:
Bullish alignment: short-term moving average (such as MA7) medium-term moving average (such as MA30) long-term moving average (such as MA60). This is a sign of an upward trend.
Bearish arrangement: Long-term moving average Medium-term moving average Short-term moving average. This is a sign of a downward trend.
Prices above the MA indicate an upward trend, while those below indicate a downward trend.

Dynamic Support and Resistance:
In an uptrend, moving averages (especially MA30, MA60) will serve as support levels during pullbacks.
In a downtrend, moving averages will become resistance levels for rebounds.

"Golden Cross" and "Death Cross":
Golden Cross: A short-term moving average crossing above a long-term moving average is a bullish buy signal.
Death Cross: When the short-term moving average crosses below the long-term moving average, it is a bearish sell signal.

! [Moving Average Diagram]

(Illustration: Bullish and bearish alignment of moving averages, golden cross and death cross)

3. Crypto Assets Practical Skills:
Common parameters: MA7 ( short-term ), MA30 ( medium-term ), MA60 ( long-term ).
Bitcoin is generally considered to be in a bull market pattern when it is above the MA60.
Moving averages often fail and give false signals during sideways and volatile markets.

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2. Relative Strength Index (RSI): The market's "fitness meter"

1. What is it?
RSI measures whether the market is currently "overbought" (exhausted) or "oversold" (depleted) by calculating the ratio of price changes. Its range is between 0 and 100.

2. Core Usage:
Overbought and Oversold Zones:
RSI 70: The market may be in an overbought state, with excessive upward momentum release and a risk of correction.
RSI < 30: The market may be in an oversold state, with excessive downward momentum released, presenting a rebound opportunity.

Divergence: This is the most powerful use of RSI!
Divergence: The price reaches a new high, but the high point of the RSI indicator is lower than the previous one. This indicates a weakening of upward momentum and is a potential signal for a market top reversal.
Divergence: The price reaches a new low, but the low point of the RSI indicator is higher than the previous one. This indicates that the downward momentum is weakening, which is a potential bottom reversal signal.

![RSI示意图]

(Illustration: Overbought and oversold areas of RSI and the phenomenon of divergence)

3. Crypto Assets Practical Skills:
In the Crypto Assets market, which is highly volatile, the overbought/oversold lines can be adjusted to 80/20 to reduce false signals.
In a strong bull market, the RSI can stay in the overbought zone (70) for a long time, and simply shorting due to overbought conditions can easily lead to liquidation.
The reliability of divergence signals is far greater than that of simple overbought/oversold.

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3. Exponential Smoothing Differential Moving Average (MACD): The Master of Trend Momentum

1. What is it?
The MACD consists of three parts:
DIF line ( fast line ): reflects short-term trends.
DEA line ( slow line / signal line ): reflects the medium to long-term trend.
Histogram (: The difference between DIF and DEA reflects the momentum of the trend.

2. Core Usage:
Golden Cross and Death Cross:
Golden Cross: The DIF line crosses above the DEA line, indicating a bullish signal.
Death Cross: The DIF line crosses below the DEA line, indicating a bearish signal.

Zero Axis Boundary Line:
MACD above the zero line: The market is in a bullish market.
MACD below the zero axis: The market is in a bear market.
The DIF line crossing the zero axis from below: is a confirmation signal for the beginning of a bullish market.

Divergence: Like the RSI, the MACD can also form top and bottom divergences, making it a powerful tool for capturing major reversals.

![MACD示意图]

(Illustration: The application of MACD's golden cross and death cross as well as the zero axis)

3. Crypto Assets Practical Skills:
MACD is very effective in trending markets, but it can repeatedly "deceive" in choppy markets.
"The golden cross above the zero axis" is one of the most reliable buy signals.
Using in conjunction with moving averages: When the price rises above MA60, and the MACD forms a golden cross above the zero line, it is a strong bullish signal.

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IV. Random Indicators ) KDJ (: A sensitive indicator for oscillating markets

1. What is it?
KDJ predicts trend reversal points by comparing the relative position of closing prices within a price range. It is very sensitive and consists of three lines: the K line, D line, and J line.

2. Core Usage:
Overbought and Oversold:
K or D value 80: Market overbought.
K or D value < 20: Market is oversold.

Cross Trading:
Golden Cross: The K line crosses above the D line, and when it's near 20, it is a buy signal.
Death Cross: The K-line crosses below the D-line, and when it is around 80, it is a sell signal.

3. Crypto Assets Practical Skills:
Due to the excessive sensitivity of KDJ, using it alone carries a high risk and is prone to false signals.
It is best suited for use in a range-bound market without a clear trend.
It is best used as a supplementary indicator to validate the signals of RSI or MACD. For example, when the MACD shows a golden cross, if the KDJ also emerges from the oversold zone with a golden cross, the signal is stronger.

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Ultimate Heart Method: How to Integrate Like an Expert?

1. Do not use any single indicator alone!
All indicators are probabilistic tools, and using them in combination can significantly improve the win rate.

2. "Threefold Confirmation" Principle:
In an ideal trading signal, it is best to receive confirmation from multiple indicators at the same time.
Example: An ideal buy signal
1. Trend Confirmation: Price is above MA60, and MA30 is above MA60 (bullish moving averages).
2. Momentum Confirmation: MACD crosses above the zero line (momentum turns bullish).
3. Timing Confirmation: RSI rises from the oversold zone (<30) to above 50, or a bottom divergence occurs (declining momentum exhaustion).

3. Understand the applicable environment for each indicator:
Trend Market: Moving Average + MACD is the king path.
Volatile Market: RSI + KDJ is more sensitive.
Looking for major reversals: Focus on the divergence signals of MACD and RSI.

4. Remember the most important sentence:
"The market is always right, and the indicators are wrong." When the indicators contradict the actual market trend, always trust the price itself. Indicators are just servants, not masters.

I hope this guide can serve as a practical manual for your trading journey. Remember, do not invest heavily before repeatedly practicing in the demo account and forming your own trading system! )#今日你看涨还是看跌？