7-day moving average = guiding light for short-term trading: opportunities above the line, risks below the line; stand firm to add positions, drop firmly to stop losses — a single move avoids 80% of pitfalls.
Are you often confused by complex indicators in short-term trading? In fact, you don't need to focus on a bunch of data; one 7-day moving average is enough for you to determine the direction.
This line is essentially the average closing price of the last 7 days; you can think of it as the 'short-term market average cost line' — when the price is above this line, most recent buyers are making money, and the momentum is strong.
When the price is below the line, most recent buyers are trapped, and the momentum is weak. Using this line correctly can save you from 80% of the detours in your buying and selling decisions.
First understand: The 7-day moving average is not mysticism, it is a 'cost thermometer'.
Don't think technical indicators are too profound; the essence of the 7-day moving average is very simple: it is the average buying cost of all traders over the last 7 days. When the price is above this line, it means most people are not losing, and market sentiment is positive; when the price is below, most people are trapped, and sentiment is likely to be low. It's like using a thermometer to determine hot and cold; this line can help you quickly see the 'temperature' of the short-term market.
Buy signal: Stand above the 7-day moving average, 'stability' is the key.
Don't rush in just because the price has jumped above the 7-day moving average; focus on whether it can 'hold steady'. You can take action in two situations:
① 'Steadily stands above' the line from below.
If the price has been lingering below the 7-day moving average, but one day suddenly rises with increased volume and closes firmly above the line (not just a spike during the day), this is the first signal. It's even more reliable if the trading volume that day is significantly larger than before — this indicates that there are indeed funds grabbing for chips, and it's not a false rise, making it a better time to enter.
② Rebound after 'pullback without breaking the line' while on the line.
If the price has been moving smoothly above the 7-day moving average and experiences a slight drop without breaking below it, then rises again, it's like tripping while running but not falling; it indicates that the upward momentum is still intact. In this case, you can add positions, moving with the trend is safer.
Sell signal: Break below the 7-day moving average, 'if it drops firmly', don't hesitate.
Selling and buying are reversed; the core is to look at 'whether it has dropped firmly'. You must run in two situations:
① 'Firmly breaks below' the line from above.
If the price has been rising steadily, but suddenly drops one day and does not recover above the 7-day moving average by the close, you need to be cautious. Especially if there are many sell orders that day and the trading volume suddenly increases — this indicates that funds may be fleeing, and the momentum may weaken. Don't hesitate, sell quickly, and don't wait until you're deeply trapped to regret it.
② Rebound below the line 'just touches the line and gets pushed down'.
If the price is already below the line, experiences a rebound, and then gets pushed down just after touching the 7-day moving average, you need to run. It's like jumping up and hitting a wall and falling back down, indicating that there are too many trapped sellers above and the selling pressure is too great — the price won't be able to rise. Don't fantasize about a 'miraculous reversal'.
Consolidation phase: Up and down? Staying still is winning.
The easiest time to lose money is during a consolidation phase: the price bounces up and down around the 7-day moving average, today it's above, tomorrow it's below, with no clear direction. During this time, do not get anxious; entering will just lead to losses — chasing when it rises and selling when it falls is simply giving money to the market.
Remember: The optimal strategy during a consolidation phase is 'not to act'. Just like waiting for a traffic light, when there is no clear green light (standing above the line) or red light (breaking below the line), do not rush; wait for the direction to be clear before acting is 10 times better than fidgeting.
Summary: The 7-day moving average is the 'fool's traffic light' for short-term trading.
Pay more attention to opportunities when above the line and be more cautious about risks when below; treat the consolidation phase as 'rest time'. You don’t need to calculate complex formulas or guess the intentions of major players; just focus on the price and its relationship with this line.
Standing firmly above the line + increased volume = it's time to buy.
Breaking below the line + increased volume = sell quickly.
Bouncing up and down = Don't act.
In short-term trading, don't be afraid of missing opportunities, just be afraid of acting recklessly. Treat the 7-day moving average as your 'buy-sell traffic light', using simple rules to control your actions is much more reliable than relying on feelings to chase highs and lows.
Remember: Making money in the cryptocurrency world does not rely on mysticism, but on thoroughly understanding simple techniques and using rules as confidence, allowing you to avoid pitfalls and maximize gains in short-term trading. Follow me for more simple and practical operational skills, let technology become your foundation for making money.
