5 Most Powerful and Best Indicators to use on Bitcoin Charts

Bitcoin is a great financial instrument to make money from. Discover the best indicators to use on Bitcoin charts to identify potential trading opportunities. 

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The craze of Bitcoin amongst people is amazing. Every trader once wanted to trade Bitcoin, but not every trader can trade it. Bitcoin trading requires in-depth market knowledge, robust analytical skills, and excellent risk management. 

Identifying when to enter or exit a position is the most difficult thing when trading Bitcoin. You can use multiple technical indicators for that, but not all are effective. In this blog, we will learn about the 6 best indicators to use on Bitcoin charts. 

Why Should You Use Indicators for Bitcoin Trading

Bitcoin trading is all about predicting when the asset price will rise and when it will fall. And for doing so, you need to watch current market conditions and historical price movements. 

Trading Instruments like Bitcoin tends to repeat history in similar market conditions. Technical analysis indicators help you in examining the asset’s history and predicting the future price direction. 

Traders use technical analysis indicators to identify when and how to buy or sell Bitcoin. You can determine the opening, closing, stop loss, take profit levels, and risk management criteria just by using indicators. 

6 Best Indicators to use on Bitcoin Charts

The crypto market is different. The unpredictability, uncertainty, volatility, and changing conditions you get here are unmatched by any other financial market. 

For trading in cryptocurrencies, especially in Bitcoin, you need indicators that are compatible with changing market conditions. Below are the best indicators to use for Bitcoin charts: 

Candlestick Patterns: Each Pattern tells you a Move

Have you ever seen a Bitcoin Chart? If you analyze the Bitcoin chart in different time frames, you will observe different candlestick patterns throughout history. 

Bitcoin prices move in a manner that forms major candlestick patterns frequently. And many times, the price moves in a manner that candlesticks have indicated. 

So you can undoubtedly use candlestick formations for Bitcoin trading. Doji, Hammer, Inverted Hammer, Bullish Engulfing, Bearish Engulfing, Morning Star, Evening Star, and Shooting Star are some frequently occurring chart patterns you can use for Bitcoin trading.

Pros 

  • Understanding, using, and spotting candlesticks is quite easy. 
  • Even beginners with a lack of market knowledge can use the patterns. 

Cons 

  • Too many patterns. Grabbing knowledge of each pattern is difficult. 
  • Many candlestick pattern looks similar that confuse traders.

Moving Averages: Moving Averages to Spot Potential Moves

With Bitcoin, Moving averages are ideal for trading any cryptocurrency or financial assets. You can use simple, exponential, or weighted moving averages to predict the next move. 

Moving average provides you with comprehensive information when plotting on a chart. You can watch the bands to identify price crossovers, touch, or break of key potential moves. The indicator can help you in spotting current market trends with their effectiveness, support, and resistance levels, and eliminate market noise. 

Pros 

  • Moving averages are compatible with diverse indicators; using them in combination is quite easy. 
  • The indicator has a wide scope. You can use it for trading diverse assets in diverse markets. 

Cons 

  • Moving averages do not work well in sideways or choppy market conditions. 
  • In Bitcoin trading, using the indicator alone can cause whipsaws. 
Best Indicator to use on bitcoin charts

Relative Strength Index: Spot Momentum with Momentum Indicators

The Relative Strength Index is a great Bitcoin buy or sell indicator. You can observe a potential momentum in Bitcoin while using t. It is the simplest tool where the price moves within the range of 1 and 100. You can determine the current trend, price key levels, and overbought and oversold conditions. 

When the price moves above 70, it suggests overbought conditions, and traders can enter a short position expecting a drop. When the price moves below 30, it suggests oversold conditions, and traders can enter a long position expecting a rise. 

Pros 

Easy to interpret and use. 

Great tools to spot price divergence. 

Cons

Not every overbought or oversold condition gives a sell or buy indication. 

RSI can also give false trade signals. 

Bollinger Bands: Track Bitcoin Volatility Like a Pro

Bollinger Bands are a comprehensive indicator for trading crypto, especially bitcoin, with high volatility. When you plot it on a chart, you generally get three bands at the top, bottom, and middle. 

When the gap between bands is significant, it suggests high volatility, and when the gap is narrow, it suggests low volatility. Also, when the middle band crosses the upper band, it indicates overbought conditions, and when the middle band crosses the lower band, it indicates oversold conditions. So, you can use the indicator for identifying potential Bitcoin opportunities. 

Pros 

  • Great tool for the highly volatile crypto market. 
  • Bollinger Bands help in determining breakouts and price crossovers. 

Cons 

  • Not every touch or breakout can guarantee you a price movement. 
  • The best results are only when you use it with the compatible indicator. 

Fibonacci Retracement: Horizontal Lines that Guide You About The Bitcoin Price

Fibonacci Retracement is a must to use technical analysis tools to identify key price levels. The tool is based on statistical and mathematical concepts that guide you throughout the Bitcoin price movements. 

Fibonacci has four major levels: 23.6%, 38.2%, 50%, 61.8%, 78.6%. Price touching each level gives key insights to traders. However, the 38.2%, and 61.8% our most important levels that suggest support and resistance levels over a period. 

Pros 

  • Ideal for golden cross and death cross strategies. 
  • Fibonacci is a widely used tool suitable for diverse assets and strategies. 

Cons 

  • Fibonacci lines can make a chart unclear and complex to interpret. 
  • The Fibonacci strategy works only when used in combination. 

Wrapping Up

We have discussed the Best Indicators to use on Bitcoin Charts. However, you cannot use any of the above indicators. For the best result, you need to combine technical analysis indicators. 

You can either use Bollinger Bands or RSI, or use moving averages or Fibonnaci, or you can even go for any other combination. Also, Bitcoin trading is affected by fundamental and sentiment analysis factors. So with technical analysis, organize a broader market overview. 

New to Bitcoin trading and don’t know how to use indicators? Open an account with Beirman Capital. Try and test diverse indicators and practice trading. 

FAQ

1. Which indicator is best for Bitcoin?

Moving Average is the best indicator to identify buy or sell opportunities for Bitcoin. 

2. What is the best indicator for Bitcoin TradingView?

You can find the top best indicators, such as RSI, Bollinger Bands, or Moving Averages, on TradingView.

3. What is the best cycle top indicator for Bitcoin?

Pi cycle top is the best cycle top indicator for Bitcoin.

4. What is the best indicator for BTC scalping?

Moving average convergence divergence is the best indicator for BTC scalping.

5. How to know if Bitcoin will rise or fall?

Organize technical analysis, use indicators, and watch fundamental analysis to know if Bitcoin will rise or fall.