can you go into a little detail about what exactly 10/21 means? how do i set btccharts up for EMA?
Hi chsados,
1. Go to
www.bitcoincharts.com2. Click on Mt. Gox on the right
3. Change the time period to 10 day, 1 hour - it's kind of hard to see on my monitor, but in this type of market, it doesn't make too much sense to scrutinize price action
4. In the "Moving Averages" box at the top, click on exponential on 10. Next, click on exponential for 25 and type 21 instead and click draw.
The simple logic behind moving averages:
Moving averages basically show you the trend direction price is going. They are used in many industries for a variety of purposes, but here in trading, we use them for trend following support and resistance. I use them to give trade signals and the trend direction. When the trend is going up, the shorter term moving averages will be above the longer term moving averages. When the trend is going down, the longer period moving averages will be above the shorter term moving averages.
I use the 10 and 21 because they fit price well and I have found them to generate not too many or too few trading signals.
Here's a chart of the financial sector. Basically, the moving averages give you an idea where price COULD be heading in the future:
