Moving Average Formula and Its Application in Crypto Market Analysis

Moving average (MA) is one of the most fundamental technical indicators used by traders to understand market dynamics. The simple moving average formula is the average of closing prices over a certain period of time. This calculation helps eliminate market noise and reveal the true trend behind constant price fluctuations.

Why Three Different Periods?

In crypto trading, three period variations are the main choices for traders: MA (7) for short-term perspective, MA (25) for medium analysis, and MA (99) for long-term view. The selection of these numbers is not coincidental but the result of years of trader experience. Each period serves a specific function in reading market signals.

The Function of Each Moving Average

MA (7): Weekly Time Window
The 7-day moving average provides the fastest response to market movements. Traders use MA (7) to capture short-term momentum and identify sharp price reversals. This indicator is highly sensitive to price movements, making it ideal for more active trading strategies.

MA (25): Stable Medium Trend
With a 25-day period, this moving average balances responsiveness and stability. MA (25) reflects medium-term market sentiment, giving traders an understanding of a more solid trend without being overly affected by random daily fluctuations.

MA (99): Long-Term Trend Foundation
The 99-day moving average represents the fundamental market trend. MA (99) acts as a major support or resistance level, indicating the general direction of price movement over a longer period. This indicator is very useful for traders using long-term or position trading strategies.

Practical Use in the Market

The moving average formula can be applied to various crypto assets such as BTC, ETH, and XRP. The combination of these three MAs creates a strong verification system: when MA (7) is above MA (25), and MA (25) is above MA (99), it indicates a healthy uptrend. Conversely, a reversed arrangement shows dominant selling pressure.

Professional traders use (crossover) signals between moving averages as entry or exit signals. These signals help reduce emotions in decision-making and provide more objective entry points based on historical price data.