#TradingTools101 We will use two moving averages of 50 and 200 days.

1. Convergence, divergence, crosses. The position of the averages shows you the market sentiment. If the short-term average (50) crosses the long-term average (200) upwards - it foreshadows a price increase. If the opposite occurs, it signals a decrease.

This moment should not be taken too literally. Moving averages are a lagging indicator; if we see a crossover on the chart - the decrease or increase has already occurred. Therefore, it is better to look ahead - if the averages are diverging - the trend is stable, if they start to converge - a reversal may happen.

2. Averages often act as dynamic support or resistance. If there is such a line in the price's path, the price may at least pause at it. It may also reverse, bouncing off it. Consider this when setting limit orders.

Example - Bitcoin chart:

Here we see a golden cross - a sign of growth. As it should be, the indicator lagged, the cross formed only after the growth occurred. But the moving averages were converging (getting closer to each other) even before that, giving a good hint that something like this would happen.

It is also visible how the MA 50 held the price and pushed it upwards. At this level, we also have a support line.