What are the top 3 indicators every crypto beginner should learn?

Understanding Moving Averages

1. Moving averages smooth out price data to help identify trends over specific timeframes, such as 50-day or 200-day periods.

2. When a shorter-term moving average crosses above a longer-term one, it often signals upward momentum—commonly called a 'golden cross'.

3. Conversely, a 'death cross' occurs when the shorter-term average drops below the longer-term one, suggesting potential bearish pressure.

4. Traders use these levels not only for entry and exit points but also as dynamic support or resistance zones during volatile market phases.

5. Beginners should start with simple moving averages before exploring exponential or weighted variants to avoid premature complexity.

Relative Strength Index (RSI)

1. RSI measures the speed and change of price movements on a scale from 0 to 100, helping assess whether an asset is overbought or oversold.

2. A reading above 70 typically indicates overbought conditions, while below 30 suggests oversold territory—though these thresholds can shift in strong trending markets.

3. Divergences between RSI and price action—such as price making higher highs while RSI forms lower highs—can warn of weakening momentum.

4. It’s critical to recognize that RSI alone doesn’t predict reversals; false signals are frequent in low-liquidity altcoin pairs or during news-driven spikes.

5. Many novice traders misinterpret RSI as a timing tool rather than a momentum gauge—this misunderstanding leads to premature entries during extended trends.

Volume Analysis

1. Trading volume reflects the number of tokens exchanged within a given timeframe and serves as confirmation for price moves.

2. A breakout accompanied by above-average volume adds credibility, whereas low-volume breakouts often fail and reverse quickly.

3. Sudden volume spikes during consolidation phases may indicate accumulation or distribution by larger participants, visible on order book depth charts.

4. On-chain volume metrics—like exchange inflows/outflows tracked via blockchain explorers—offer deeper context beyond exchange-reported figures.

5. Beginners frequently overlook volume profiles across different timeframes, missing key imbalances where high-volume nodes anchor future price behavior.

Frequently Asked Questions

Q: Can I rely solely on RSI to decide when to buy or sell? No. RSI is a momentum oscillator—not a standalone decision engine. Using it without confirming candlestick patterns, volume shifts, or broader market structure increases risk of whipsaw losses.

Q: Why does the 200-day moving average matter more than other periods? The 200-day MA represents roughly a full trading year and is widely watched by institutional investors and algorithmic systems. Its breach often triggers automated responses across multiple platforms and funds.

Q: How do I verify if reported trading volume is trustworthy? Cross-check volume across at least three reputable exchanges and compare against on-chain transfer volumes using tools like Glassnode or CryptoQuant. Discrepancies greater than 3x suggest possible wash trading.

Q: Is volume more important than price action for new traders? Neither dominates—the two must be read together. Price tells you what happened; volume tells you how strongly it happened. Ignoring either creates blind spots in interpreting market intent.