Moving average channel is a trend following indicator.
As a trend following indicator,Moving Average channel was created by Jake Bernstein to help traders to know the direction of the market,that is whether the market is moving upwards or in a downwards direction.The only different that it has with other moving average is that it has an upper and lower boundaries.The upper boundary has a period of 10 while the lower boundary has a period of 8.
The upper boundary is normally indicated green/blue in color while the lower boundary is normally indicated red in color.
Moving average channel is based on bullish and bearish.
Therefore, since moving average channel has tow boundaries,the formula for each boundary will be as follows;
Upper channel = (average price + no of standard dev for upper channel*standard dev of last period)
lower channel = ( average price + no of standard dev for lower channel*standard dev of last period)
Therefore, moving average channel can further be explained for bullish and bearish cryptocurrency market as follows;
1. Moving average channel bullish cryptocurrency market
Since moving average channel is based on bullish and bearish and it has upper and lower boundaries, it therefore follows that when the prices accumulate on the upper boundary, that will be an indication that the market has gained support and it will start moving in upwards direction thus signaling the cryptocurrency trader to purchase a given amount of cryptocurrency with their USDT balance. The trader can either place a market buy order which will be processed immediately or a limit buy order which will be processed when the market reaches their limit buy order price. This is indicated as from below;
The above is the TRX market against USDT. Three points are being indicated. There is point A, point B and point C. Point A is the upper boundary while point B is the lower boundary.On the other hand, point C is the support point. At point C, the price has accumulated on the upper boundary thus an indication of an upward market since a support point has started to be created over there. This will signal the cryptocurrency trader to purchase a given amount of TRX with their USDT balance. The trader can either place a market buy order or a limit buy order. The market buy order will be processed immediately while the limit buy order will be processed when the market reaches a limit buy order price. When the order is being processed, the account of the trader will start increasing in value in terms of USDT.
2. Moving average channel bearish cryptocurrency market
Since moving average channel is based on bullish and bearish and it has upper and lower boundaries, it therefore follows that when the prices accumulate on the lower boundary, that will be an indication that the market has gained resistance point and it will start moving in a downwards direction thus signaling the cryptocurrency trader to sell a given amount of cryptocurrency which they had previously purchased and is currently holding. The trader can either place a market sell order which will be processed immediately or a limit sell order which will be processed when the market reaches their limit sell order price. This is indicated as from below;
The above is the TRX market against USDT. Three points are being indicated. There is point A, point B and point C. Point A is the upper boundary while point B is the lower boundary.On the other hand, point C is the resistance point. At point C, the price has accumulated on the lower boundary thus an indication of a downward market since a resistance point has started to be created over there. This will signal the cryptocurrency trader to sell a given amount of TRX which they had previously purchased and is currently holding to avoid declining the value of their trading account. The trader can either place a market sell order or a limit sell order. The market sell order will be processed immediately while the limit sell order will be processed when the market reaches a limit sell order price. When the order is being processed, the account of the trader will have increased in value in terms of USDT.
cryptocurrency market is a highly volatile market. As a cryptocurrency trader,whenever you place a buy order,always make sure to apply risk management so that whenever your buy order goes against you, your account do not depreciate so much in value.
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